Supervisory Board
HERMANN J. ABS
Frankfurt am Main
Honorary Chairman,
Deutsche Bank AG
Honorary Chairman
HILMAR KOPPER
Frankfurt am Main
Member of the Board of
Management,
Deutsche Bank AG
Chairman
KARL FEUERSTEIN *)
Mannheim
Chairman of the Corporate Labor
Council, Daimler-Benz AG
Chairman of the Joint Labor Council,
Mercedes-Benz AG
Deputy Chairman
PROF. DR. RER. NAT. GERD BINNIG
Munich
Head of IBM Physics Group
DIPL.-ING. RICHARD BOLLMANN *)
Mannheim
Senior Manager , Deputy Chairman
of the Senior Managers' Committee,
Mercedes-Benz AG
DR. RER. POL. WOLFGANG ROLLER
Frankfurt am Main
Speaker for the
Board of Management,
Dresdner Bank AG
PROF. DR.-lNG. E.H.
WERNER BREITSCHWERDT
Stuttgart
DR. RER. POL. HORST I. BURGARD
Frankfurt am Main
Member of the Board of
Management,
Deutsche Bank AG
HELMUT FUNK *)
Stuttgart
Chairman of the Labor Council,
Untertlirkheim Plant and Main
Office,
Mercedes-Benz AG
ERICH KLEMM *)
Calw
Member of the Labor Council,
Sindelfingen Plant,
Mercedes-Benz AG
MARTIN KOHLHAUSSEN
Frankfurt am Main
Speaker for the
Board of Management,
Commerzbank AG
RUDOLF KUDA *)
Frankfurt am Main
Departmental Manager within the
Board of Management,
Metal-Workers' Union
HUGO LOTZE *)
Reinhardshagen
Chairman of the Labor Council,
Kassel Plant, Mercedes-Benz AG
DIPL.-ING. HANS-GEORG POHL
Hamburg
Deutsche Shell AG
SIEGFRIED SAUTER *)
Frankfurt am Main
Deputy Chairman of the Corporate
Labor Council, Daimler-Benz AG
Chairman of the Joint Labor Council,
AEG Aktiengesellschaft
DR. JUR. ROLAND SCHELLING
Stuttgart
Attorney at Law
PETER SCHONFELDER *)
Augsburg
Member of the Labor Council,
Deutsche Aerospace AG
PROF. DR. JUR. JOHANNES SEMLER
Kronberg/Taunus
Member of the Board of
Management,
Mercedes Aktiengesellschaft
Holding
FRANZ STEINKUHLER *)
Frankfurt am Main
First Chairman,
Metal-Workers' Union
HERMANN-JOSEF STRENGER
Leverkusen
Chairman of the
Board of Management,
Bayer AG
BERNHARD WURL *)
Mainz
Departmental Manager within the
Board of Management,
Metal-Workers' Union
*) Elected by the employees.
Board of Management
EDZARD REUTER
Stuttgart
Chairman
PROF. DR.-ING. E.H. DR. H.C.
WERNER NIEFER
Stuttgart
Mercedes-Benz
Deputy Chairman
DR. JUR. MANFRED GENTZ
Berlin/Stuttgart
Daimler-Benz InterServices
(debis)
DR. JUR. HANS-WOLFGANG
HIRSCHBRUNN
Stuttgart
Personnel
DR. RER. POL. GERHARD LIENER
Stuttgart
Finance and Materials
JURGEN E. SCHREMPP
Munich
Deutsche Aerospace (DASA)
ERNST G. STOCKL
Frankfurt am Main
AEG
HELMUT WERNER
Stuttgart
Mercedes-Benz
PROF. DR.-ING. HARTMUT WEULE
Stuttgart
Research and Technology
The Corporate Principles of Daimler-Benz
Our work at Daimler-Benz
serves people and their en
vironment. We aim to offer the
world's most advanced products,
systems and services.
This requires a continual com
mittment to technical, business,
and social innovation as well as
a corporate culture characterized
not by complacency, but by
creative unrest.
In a world increasingly com
plex, with promising opportunities
- but also risks - even minor
events can take on consequences
of major proportions. Therefore,
we must carefully weigh our every
action.
We owe it to future genera
tions to use our natural resources
prudently and sparingly. This sense
of responsibility must be reflected
in all our thoughts and activities
throughout the Group.
Our customers are the focus
of our efforts. We must strive
not just to meet their expecta
tions, but to exceed them. Co
operation and the open exchange
of know-how throughout all areas
of our companies are central to
meeting this goal.
Just as we are accountable
to our customers, we are equally
responsible to the companies'
owners as well as to the public.
This means we must be willing to
provide feedback to others and to
assess ourselves openly and hon
estly.
We aim to learn better and
faster than our competitors.
To achieve this, we need not
only flexible organizational struc
tures but also employees who
think entrepreneurial^.
Key to our success are em
ployees with a sense of respon
sibility, independence, creativity,
drive, teamwork, and openness to
new ideas. We therefore promote
every employee's personal devel
opment to the best of our abilities.
Furthermore, we are active in
certain specialized areas, such as
applied microelectronics, domestic
appliances, selected financial ser
vices, and countertrading, where
we aim to be highly competitive.
To a great extent, these activities
interlink our core business areas.
Each of our business areas
falls under the responsibility of one
of our four corporate units. Thus,
Mercedes-Benz, AEG, DASA, and
Daimler-Benz InterServices (debis)
work together under the umbrella
of Daimler-Benz, the managing
holding company of our group.
Our cooperation
aims to:
Combine know-how and
experience to create new
dimensions - Responsibly
promoting progress for
everyone
We are proud to continue a
distinguished tradition guided
by these principles.
Daimler-Benz does business
in all corners of the globe.
We are convinced of the advan
tages to everyone of open trade
borders throughout the world.
Therefore, we view competition as
a welcome proving ground. The
measure of our success is the re
cognition our work receives, and
economic success is an undenia
ble part of this recognition.
Inherent to our philosophy is
respect for other cultures. As an
international company, we reject
all forms of discrimination. This
principle applies, moreover, to the
filling of management positions,
where we will extend equal oppor
tunities to every employee regard
less of nationality.
Daimler-Benz is an integrated
technology group. This means
that our various business areas are
linked by cross cutting technolo
gies and system structures. We
place a special emphasis on our
know-how and experience in traffic
management systems and trans
portation technologies.
Our core businesses include
vehicles for passenger and freight
transportation, rail systems, aero
space, propulsion systems, de
fense systems, automation, power
transmission and distribution, and
information-technology services. In
these areas, Daimler-Benz strives
to be a world leader.
Executive Management and Daimler-Benz Group Representatives
Executive Management and
Daimler-Benz Group
Representatives
DR. JUR. BOY-JURGEN ANDRESEN
Personnel and Social Policy
HANSJORG BAUMGART
Daimler-Benz Art Possessions
MARTIN BERGER
Annual Accounts and Disclosure
Daimler-Benz Group
Representatives
Berlin
PETER-HANS KEILBACH
Englerallee 40
D-1000 Berlin 33
Bonn
ALFONS PAWELCZYK
Friedrich-Ebert-Allee 26
D-5300 Bonn 1
DR. RER. POL. ROLF A. HANSSEN *)
Corporate Planning and Controlling
Brussels
DR. IUR. HANNS R. GLATZ
133, Rue Froissart - Bte 29
B-l 040 Brussels
Hong Kong
(until December 31, 1992)
KLAUS B. BEHRENDT
6th Floor Ruttonjee House
11 Duddell Street, Central
Hong Kong
Tokyo
RAINER JAHN
SVAX TT Building
3-11-15 Toranomon
Minato-ku, Tokyo 105
Japan
Washington D.C.
RICHARD H. IMUS
Suite 800, 1350 I Street, N. W.
Washington D. C. 20005
U.S.A.
MATTHIAS KLEINERT *)
Public Relations and Economic
Policy
DR.-ING. MICHAEL KRAMER
Research 1
DR. RER. NAT. VOLKER LEHMANN
Research 2
WERNER POLLMANN
Technology, Environmental Officer
Daimler-Benz
JORG SEIZER
Subsidiaries and Affiliated
Companies
KONRAD STRAUB
Corporate Auditing
DR. OEC. PUBL. PAUL WICK *)
Finance and Taxes
DR. IUR. SOLMS WITTIG *)
Staff Lawyer
GERD WORIESCHECK
Personnel Development
for Senior Executives
*) With general power of procurement.
To the Stockholders and Friends of our Company
Up until the middle of the 1992
financial year, we were firmly con
vinced that our corporate approach
would again lead to strong growth in
our operating results. But things
have turned out much differently
than anyone could have expected.
What happened, and why?
A number of unforeseeable
events occurred in 1992; a constella
tion of circumstances that affected
not only us, but nearly all of German
industry.
One of the major incidents here
has been the drastic decline, since
mid-1992, in domestic demand in
the Federal Republic of Germany. At
the same time, we are still waiting
1993 will also bring far more
trials and tribulations than we could
have foreseen at the start of 1992.
For the way things stand now, an
upturn in the economy will not come
about as quickly as had been hoped.
We can expect exports to pick up in
the second half of the year at the
earliest, but even then it will be too
soon to hope for an increase in do
mestic demand. In addition, recon
struction of the new Eastern German
states is making demands on all of
us that are greatly above and beyond
that which has already been pro
vided. On the whole, it looks as if
much of what German business and
industry could just manage to mas
ter in the past few years now simply
overstrains its capacities.
In every respect, therefore, 1993
will not be easy. But even given to
day's much more difficult scenario,
we still have reason to be confident.
We have made excellent progress to
wards reaching our strategic goals of
internationalization, of honing our
competitive edge on the European
home market, of refurbishing and
supplementing our product ranges.
Then there are the many measures -
whether planned or already imple
mented - to reduce costs and render
our processes, procedures and or
ganizational structures more flexible.
for the international business cycle
to recover from its slump and once
again spur export opportunities. As
a result, we find that almost all our
West European trade partners are
also suffering from this economic
downturn. Moreover, public con
tracts and orders have dropped off
sharply, while politicians respon
sible seem unsure about which basic
future sourcing policies to pursue.
Finally, the turmoil the European
Monetary System is undergoing has
dramatically worsened the situation
of the German economy.
The key fields of activity of your
company have not been spared by
these upheavals. In particular, the
demand for passenger cars and com
mercial vehicles has plunged, hurt
ing us seriously.
With the inclusion of Deutsche
Aerospace Airbus, now consolidated
for the first time, Group turnover
was projected for more than DM
105,000,000,000. As it was, we just
missed reaching the magic number
of DM 100 billion. It was expected
that consolidated net income of the
Group, as well as operating results,
would rise strongly, but instead they
fell by 25%. One sign of this is that
Group income and revenue tax ex
penditures did not increase, but de
creased by more than DM 450 mil
lion. But what is especially disheart
ening is that in the course of the
1992 fiscal year, we had to reduce
our workforce in Germany by over
18,000 people.
We were among the first to fore
see coming trends and to adapt our
strategies and structures accor
dingly. Since then, others have also
realized that the present short-term
downswing merely reflects phenom
ena long in the making; namely, the
sweeping changes in the structure of
the automotive industry. Your com
pany is aware of these transforma
tions and is prepared for them.
Against the backdrop of today's
critical situation, the advantages of
our new structure are thrown into
high relief. For example, fully con
solidating Deutsche Aerospace
Airbus has had a very positive effect
on the operating results for the
Group as a whole. This is only one
example, albeit the most important
one, of how your company's new
structure can balance out and com
pensate for economic swings.
We believe this justifies our pro
posal that dividends be maintained
at last year's level. It is our belief
that you, the shareholders, should
continue to enjoy the benefits of
your company's long-term earnings
trends, regardless of the occasional
setback.
To maintain these overall
positive income trends, we have
been working very hard since the
mid-1980's to cut costs and improve
efficiency. In the motor-vehicle divi
sion alone, these comprehensive ef
forts have meant annual savings of
several billion marks. Similar pro
grams have been initiated in every
division of the Group, and include
exploiting productivity reserves to
the fullest. Given present economic
stagnation, cost-efficient procedures
and processes must and will be con
tinued and intensified.
Where corresponding staff re
duction has been unavoidable, we
have been able to do so in a manner
acceptable to all parties. Unfor
tunately, future interests of the
Group as a whole may at some time
necessitate active measures above
and beyond this.
In addition, we have launched
broad-based measures to make our
organizational structures more flex
ible. Consequently, your company is
already benefitting from leaner cen
tral offices, fewer levels of hierarchy,
higher performance, profit centers
with decentralized decision-making
authority, a heightened sense of the
individual's responsibility, and more
room for entrepreneurial creativity.
These policies are not empty
phrases, but are quickly becoming
the reality of our day-to-day opera
tions. They are key components of a
corporate culture characterized by
creative unrest and intradivisional,
intrahierarchical cooperation.
A further major component of
our corporate culture is working in
small groups. For example, by 1995,
group work will be extended to in
corporate about half of those work
ing in production at Mercedes-Benz.
Naturally, we expect this manufac
turing method to also reduce costs
significantly, especially since it will
be subject to constant, painstaking
cost-benefit analyses.
These processes entail major al
terations in long-standing structures
and conventional behavior. But since
we had decided to undertake these
steps years ago voluntarily, and not
because a changed economic reality
forced us to, we are certain that we
will harvest the fruits of our labors
ahead of others. But even more im
portant, the men and women work
ing for your company are helping
implement these occasionally pain
ful changes - an attitude that is not
part and parcel of every company.
One of our primary strategic
goals is to globalize your company.
Only thus can we benefit from the
advantages of specific business and
industry locations; only thus can we
strengthen our products' compet
itiveness. Moreover, the global ap
proach prevents us from becoming
too dependent on haphazard fluctua
tions in currency exchange rates.
For although our hedging measures
to stabilize exchange rates made up
for some of the loss, in the closing
months of 1992 such movements
lowered our sales proceeds by about
one billion Deutschmarks.
As noted, we have made good
progress in internationalizing pro
duction structures. We have inten
sified our collaboration with Ssang
Yong, the South Korean automobile
manufacturer, and have stepped up
our operations in Mexico by opening
our first passenger-car assembly
plant on the North American conti
nent and by establishing a new pro
duction plant for city and regional
buses. International activities like
these give us solid footing on growth
markets of the future.
A completely different kind of
business opportunity is our joint
venture between debis and Gas-
prom, the Russian natural-gas sup
plier. Our strategic alliances also
serve to help internationalize
Daimler-Benz; just a few examples
include our active cooperation with
Mitsubishi, as well as DASA and
Tupolev's joint study on hydrogen
propulsion systems for aircraft.
1992 also saw the collaboration
of debis and Cap Gemini Sogeti bear
fruit; in fact, this cooperation will
soon enable us to provide compre
hensive information processing
services Europe-wide.
Of course, we can continue im
plementing our strategies only if we
have internationally-experienced
managers and co-workers. To ensure
that the men and women working in
our integrated high-technology
group understand and identify with
our global perspective, we have
drawn up a set of guidelines entitled
"New, Productive Syntheses of
Knowledge and Experience: For Con
scientious Progress for Everyone".
These guidelines set high standards
for our integrated high-technology
Group. But they also outline exciting
perspectives for shaping the future
of our company, and for all those
who think in global dimensions and
are ready and willing to work to
gether to find answers to today's and
tomorrow's problems. And given the
men and women who work in your
company, we are sure that we can
meet the challenges facing us in the
current financial year as well. By
maintaining our strength and conti
nuity in difficult times, we can pre
pare for a later upswing and take
part in its prosperity even more
fully.
However, we are expanding our
worldwide activities not only in pro
duction and supply. Global sourcing,
design centers, and research field of
fices are part of the picture, as is the
strategic extension of our worldwide
communications networks to im
prove our public relations work.
The annual report also reflects
the growing internationalization of
your company, for we are now in
cluding the same kind of supplemen
tary information found in U.S. an
nual reports. For this reason, we are
concentrating on the consolidated
financial statements, instead of pub
lishing both that and the complete
annual statement of accounts of
Daimler-Benz AG as well. Of course,
you may also obtain the annual
statement of accounts on request,
and it will be available for your per
usal at the Annual General Meeting
as well.
Much progress has been made
in Europe. Along these lines, by
acquiring the majority interest in
Fokker, the Dutch aircraft firm,
DASA will be able to offer a full
range of products and services in the
promising field of regional aircraft.
This acquisition also makes DASA
Europe's largest aeronautics and
aerospace company. At the same
time, we have completed our re
structuring, including the integra
tion under company law of
Messerschmitt-Bolkow-Blohm and
Telefunken Systemtechnik with
DASA. This marks an important step
towards restructuring Germany's
aeronautics and aerospace industry
into an internationally competitive
entity.
trations fell to 130,300 vehicles
(-10%). New registrations of our
S-class in its first full year of avail
ability increased by 12% to 22,400
vehicles. Our SL convertible, with
11,900 (1991: 7,500) registrations,
remained highly popular.
Exports of Mercedes-Benz cars,
at 288,500, were 2% up on those of
1991. Exports to European Commu
nity countries almost matched those
of the previous year. While substan
tial increases were achieved in the
United Kingdom, Spain and above all
Portugal, declines were recorded in
Italy, France and other EC countries,
due to prevailing economic condi
tions.
Business in the U.S. showed a
gratifying increase; despite the diffi
cult general market situation we
sold 63,300 cars (+ 8 %). The 1992
award of the U.S. Environmental Pro
tection Agency went to our S-class;
this series increased its share of
the "high luxury segment" to 41%
(1991:37.5%).
Mercedes sales were among
those to suffer from the slowdown in
the Japanese car market. With
29,600 new registrations (- 13%)
however, the company remained the
leading import marque. Our busi
ness in the Far East outside Japan
made extremely positive progress.
Due to the sharp fall in car de
mand in Germany, which intensified
considerably during the course of
the year and, in contrast to earlier
cycles, was also felt in the luxury
car segment, Mercedes-Benz cut
back its car production to 529,400
units (1991: 578,000).
Disappointing World
Economic Trends
Daimler-Benz:
Sales of over DM 98 Billion
In many industrial countries,
economic activity was influenced by
the continued low level of demand
for consumer and capital goods.
Only in the U.S. did a long-awaited
economic recovery take place during
the year under review. In the West
European countries, the economic
indicators for the most part showed
a downturn in the second half of the
year, with capacity underutilization
and a rise in unemployment in al
most all countries. The Japanese
economy too declined in 1992.
In Germany, the economic slow
down in the middle of the year came
about surprisingly suddenly and was
unexpectedly fierce. High interest
levels played a considerable part in
this. In contrast to past economic cy
cles, it was not possible to compen
sate for the reduced domestic de
mand by means of increased foreign
trade. Furthermore, the rise in the
value of the Deutschmark within the
European Monetary System made
the price of German products in EC
markets considerably less competi
tive. In the face of rising unit labor
costs and dwindling profit margins,
many companies were forced to
modify their investment plans, with
consequences also for projects in the
new Federal States. Despite the con
tinuing difficulties and a further fall
in employment, the gross domestic
product of East Germany rose in
1992 for the first time following
sharp declines.
Note:
The Business Review is combined for
Daimler-Benz AG and for the Group.
Consolidated sales of Daimler-
Benz totaled DM 98.5 billion (+ 2%)
in the 1992 financial year. Sales in
the European Community totaled
DM 65 billion as in the previous
year, of which DM 42.6 billion
(1991: DM 42.7 billion) was gener
ated in the German market. We re
corded sharp increases, 8% in each
case, in the U.S. (DM 13 billion) and
in other exports markets (DM 21 bil
lion). Excluding intragroup business,
Mercedes-Benz accounted for about
two thirds, AEG for 11%, Deutsche
Aerospace for 17% and debis for 6%
of consolidated sales.
Mercedes-Benz:
Worldwide Sales of 527,500 Cars
In the absence of stimuli at the
wider economic level, the expected
increase in sales in major car mar
kets in 1992 largely failed to come
about. In Western Europe and the
U.S., the markets remained static,
while Japan experienced a substan
tial decline. With the end of the
post-reunification boom, market-
depressing factors won the upper
hand in the German car market too.
Demand in Germany slowed up con
siderably, particularly in the second
half of the year.
At Mercedes-Benz too, car
business did not meet expectations.
Worldwide sales fell by 5% to
527,500 units.
In Germany 239,000 (1991:
270,400) Mercedes-Benz cars were
newly registered, 10,100 (1991:
7,700) or 4% of these in the new
Federal states. Business on the die-
sel side remained relatively stable,
with 83,300 registrations (1991:
89,200). In the last year prior to the
model change in the compact series,
74,000 of these cars were newly reg
istered in Germany, the most popu
lar cars being the entry-level 190 D
and the 190 E 1.8. Mid-series regis
Mercedes-Benz:
Commercial Vehicle Business
Becomes More Difficult Still
In the commercial vehicle mar
kets too, conditions were generally
difficult in the year under review.
The downward trend in demand for
commercial vehicles continued in
almost all the West European coun
tries. The U.S. market however saw
the start of a recovery, while in
Mexico and Argentina the volume
of business increased further.
Due to the unfavorable condi
tions in the West European commer
cial vehicle markets, Mercedes-Benz
was unable to maintain the positive
business trend of 1991. New regis
trations of Mercedes-Benz commer
cial vehicles in Germany fell by 10%
to 109,800. Vans from 2 to 6 t and
trucks over 6 t were both affected by
this. The trend in buses however
was positive. 2,800 new Mercedes-
Benz buses were registered, 35%
more than in the previous year. At
31%, the company maintained its
share of the West European market
for trucks over 6 t at last year's high
level, despite the intensified compe
tition. However, our total new regis
trations in Western Europe were
9% down on 1991.
Incoming orders totaled DM 12.1
billion in the year under review, an
increase of 6% on the comparable
figure for 1991. This increase was
achieved only in the German mar
ket, where demand increased by
16% to DM 7.4 billion. New export
orders fell by 6%.
The Rail Systems field of activity
recorded a particularly large in
crease of more than 60% in orders.
Numerous large orders received by
MAN GHH Schienenverkehrstechnik
GmbH for low-floor streetcars and an
order for 90 locomotives by the
Deutsche Bundesbahn/Deutsche
Reichsbahn placed with the newly
acquired AEG Schienenfahrzeuge
GmbH contributed in large measure
to this. In the automated manufac
turing, process engineering, environ
mental technology and postal auto
mation markets, the Automation
field of activity received numerous
orders despite the unfavorable mar
ket conditions in the plant and engi
neering industry. In the Electro-
technical Systems and Components
field of activity, orders did not quite
match the high level of 1991,
since the economic trend led to a
pronounced decline in orders for
motors. In Microelectronics, TEMIC
TELEFUNKEN microelectronic
GmbH, a joint venture formed by
AEG and Deutsche Aerospace AG,
was included on a 50% basis in the
financial statements of AEG as of
luly 1, 1992; comparably calculated,
incoming orders showed an
increase.
Due to this generally unsatisfac
tory market situation, production
at our German factories had to be
reduced by 13% from the extremely
high level of the previous year, to
164,600 vehicles.
At 112,800 commercial vehicles
(+ 5%), the production volume of the
foreign companies of the group was
higher than ever before. In the U.S.,
Freightliner increased its production
by 33% to 33,300 trucks and in the
fiercely contested market for heavy
Category 8 trucks (upwards of 15 t
gvw), moved into the lead for the
first time, with a market share of
23%. Our companies in Mexico,
Argentina and Turkey also in
creased their production and sales.
Mercedes-Benz do Brasil on the
other hand was forced to cut back its
production schedules substantially
due to difficult conditions in the
domestic market. The general weak
ness of the West European market
was not without consequences for
Mercedes-Benz Espana; production,
which had increased in the previous
year by 26%, had to be reduced by
6% to 26,500 vans.
In the group as a whole, 277,300
commercial vehicles were produced
during the year under review.
The share of foreign production
companies in this increased to
41% (1991: 36%).
AEG:
Concentration of Forces as a
Result of Structural Adjustments
The difficult economic conditions
caused output in the West German
electrical engineering industry to
fall by almost 5%. Nevertheless,
business of the AEG corporate unit
increased in important areas of ac
tivity, particularly Rail Systems and
Power Transmission and Distribu
tion.
Despite more difficult
conditions, consolidated
sales rose by 2% to over
DM 98 billion.
The largest increases,
8% in each case, were
recorded in the U.S. and
other foreign markets
outside the EC.
Deutsche Aerospace Concludes
Integration Process
In the year under review, the
activities of Messerschmitt-Bolkow-
Blohm (MBB) and Telefunken Sys-
temtechnik (TST) were combined
with those of the old Deutsche Aero
space. The newly created Deutsche
Aerospace will form the core com
pany for the operative business of
the aerospace corporate unit of the
Daimler-Benz group. With this step,
the company will substantially im
prove its capacity for action and co
operation on the international mar
kets and will also achieve greater
clarity and efficiency of operation.
Due to a decision of the GATT
panel, Daimler-Benz AG decided in
negotitations with the German gov
ernment to forego exchange rate
support for Deutsche Airbus GmbH.
In return it was agreed, in addition
to other considerations, that DASA
should acquire the 20% stake held
by Kreditanstalt fur Wiederaufbau
earlier than originally planned. This
transfer allowed the subsidiary
Deutsche Airbus GmbH, Hamburg,
which was previously not fully con
solidated, to be integrated fully into
the group retroactively from January
1, 1992. Since October 1, this com
pany has been operating under the
name Deutsche Aerospace Airbus
GmbH.
In parallel with this restructur
ing, the process of organizational
streamlining and cost reduction con
tinued, particularly in the central
administrative departments.
In mid 1992, DASA transferred
its microsystems and vehicle safety
activities to TEMIC TELEFUNKEN
microelectronic GmbH, a joint ven
ture in which Deutsche Aerospace
and AEG each have a 50% stake. In
this new company, all the activities
of the Daimler-Benz group in the
fields of semiconductors, micro
systems and vehicle equipment have
been grouped together. After the
inclusion of Deutsche Aerospace
Airbus and TEMIC (comparably cal
culated), Deutsche Aerospace
slightly increased its consolidated
sales during the year under review.
The increase was chiefly due to the
invoicing of large satellite projects.
The trend in incoming orders
was heavily influenced by the
Airbus programs; however, the com
parable figure for the group, at DM
12.5 billion, was down on the 1991
level of DM 15.1 billion.
debis: Further Increase
in Total Output
debis again achieved a sharp
increase in total output in the year
under review. The divisions System-
haus, Financial Services and Trading
made above average contributions to
growth. The Financial Services divi
sion remained the mainstay of busi
ness with a share of 72%.
debis obtained 48% of its total
business in Germany, 12% in the EC
partner countries, 31% in the U.S.
market and 9% in other markets.
79% (1991: 77%) of total output in the
year under review related to customers
outside the Daimler-Benz group.
In addition to further growth
from within, the inclusion of the for
mer German Cap Gemini SCS com
panies had a positive effect at debis
Systemhaus.
Dynamic growth in the Financial
Services division continued in 1992.
Particularly the companies in Ger
many, the U.S., the United Kingdom,
the Netherlands and Italy contrib
uted to this gratifying trend. The fi
nancing and leasing of Mercedes-
Benz vehicles was the unchanged
focus of activities. The newly formed
companies debis Leasing GmbH
in Germany and debis Financial
Services Inc. in the U.S. began oper
ation in the year under review, pro
viding financing for products other
than motor vehicles, debis Aviation
Leasing GmbH, Stuttgart, will do
business with customers beginning
in 1993.
The organizational restructuring
of insurance activities in the
Daimler-Benz group and in the ex
ternal industrial client sector under
the roof of debis Assekuranz Ver-
mittlungs GmbH was concluded in
the year under review.
The Trading division, with its
companies debis International Trad
ing GmbH and debis Industriehandel
GmbH, substantially improved its
market position. The development of
the Marketing Services division was
impaired by the economic downturn
in Germany in the year under
review. The pleasing growth of busi
ness with customers outside the
Daimler-Benz group continued, how
ever.
Since the start of trial service
for the Dl and D2 networks in the
second half of 1992, debitel, as a
private telephone company, has
provided access to these mobile
communications services coupled
with competent, individual advice to
customers.
Employment
in the Daimler-Benz Group
Increased International
Purchasing Activities
At the year-end, the Daimler-
Benz group employed 376,467
people (1991: 388,696), 302,464
(1991: 317,461) of them in Ger
many.
At the end of December,
Mercedes-Benz employed 222,482
people, AEG 60,784, DASA 81,872
and debis 8,258. Daimler-Benz AG
(Holding) had 3,071 employees,
some 555 of them in corporate man
agement functions, 1,287 in central
research activities and 1,229 in
service sectors working for the cor
porate units and for the Mohringen
offices.
In Germany, employment at the
corporate units was generally unsat
isfactory due to the downturn in the
economy. At our foreign companies
however, capacity was for the most
part fully utilized.
Due to the unsatisfactory level of
orders in the vehicle sector, there
was an increasing need for adjust
ments at the domestic plants of
Mercedes-Benz AG. At AEG, employ
ment in 1992 was generally satisfac
tory. During the last months of the
year however, production had to be
adjusted to the poor trend, partic
ularly in Germany, in demand. The
employee numbers of Deutsche
Aerospace reflect the inclusion for
the first time, on a pro rata basis, of
Eurocopter and TEMIC and the full
consolidation of Deutsche Aerospace
Airbus. Changes in government
budgets however resulted in capac
ity of Deutsche Aerospace being
inadequately utilized in the year
under review. The increase, compar
ably calculated, in employee num
bers at Daimler-Benz InterServices
(debis), was due to the inclusion of
the German subsidiaries of CAP
Gemini.
The Daimler-Benz group pur
chased goods and services from
around the world to the value of DM
55.7 billion (1991: DM 55.4 billion).
Mercedes-Benz accounted for almost
three quarters of this, AEG for
10.7%, Deutsche Aerospace for
14.8% and debis for 4%.
Our purchasing activities were
affected to a large degree by the dif
ficult economic situation. Overall,
prices of goods and services pur
chased remained virtually static.
With our global sourcing strat
egy, we continued to further interna
tionalize our purchasing. Our pur
chasing departments in Germany
are assisted in important procure
ment markets by corporate co
ordinating offices. We expect to find
new opportunities in the East Asia
region and particularly in South
China, with its extremely rapid pace
of economic development.
The new structure of Daimler-
Benz, based on performance centres
and leaner management, promotes
and intensifies the integration of the
suppliers into our planning and
permits further progress to be made
towards ensuring the complete-
systems capability of suppliers. With
these competent partners who
contribute their know-how from the
earliest evolution of the product,
and also through low costs and high
quality, we shall together be able to
keep pace with the demands of the
market. In these activities we give
the highest priority to meeting our
environmental responsibilities. We
also, along with other West German
companies, support the idea of a
purchasing drive for the new Federal
States, as instigated by the German
government. By helping East German
suppliers to become fully competi
tive and by increasing the volume of
goods and services we obtain from
the new Federal States substantially
in the coming years, we intend to
make our contribution to the eco
nomic upturn in that part of Ger
many.
Investment Remains
at a High Level
During the year under review,
we again invested substantial sums
to safeguard the future of the
Daimler-Benz group of companies.
Additions to fixed assets totaled
DM 7.8 billion (1991: DM 6.5 billion)
and intangible assets rose by DM 0.2
billion; the net additions to financial
assets amounted to DM 0.3 billion
(1991: DM 2.3 billion), depreciation
and disposals of fixed and intangible
assets to DM 5.5 billion.
Mercedes-Benz again accounted
for DM 4.2 billion of the investment
in fixed assets; DM 3.6 billion (1991:
DM 3.3 billion) of this sum was de
ployed in Germany. As in past years,
the emphasis was on the Passenger
Car division. DM 2.7 billion was in
vested in efficient, modern manufac
turing facilities, in new products and
in preparations for future tasks. The
car assembly plant in Rastatt, along
with preparations for the new com
pact series, were at the forefront of
these activities. Investment in the
Commercial Vehicle division totaled
DM 1.1 billion, of which DM 0.6 bil
lion, around half, was spent at the
plants in Germany and was directed
towards additions and renewals in
the product ranges, modernization of
manufacturing plant and the intro
duction of new technologies.
Additions to fixed assets
amounted to DM 1.1 billion at DASA
(excluding the first time contribution
of DM 1.4 billion by Deutsche Aero
space Airbus), DM 0.8 billion at AEG
and DM 0.2 billion each at both
debis and the holding company. At
the operative level, the funds were
chiefly used in order to develop new
products and to further increase
productivity.
Additions to leased equipment
increased from DM 4.2 to DM 5.2
billion. The leasing business is fi
nanced by depreciation and disposal
charges and by sequential additions
to liabilities. Borrowing to finance
the leasing and sales financing
companies totaled DM 11 billion
(1991: DM 8.1 billion).
DM 9.3 Billion Spent
on Research and Development
The spending of the Daimler-
Benz group on research and develop
ment in 1992 totaled DM 9.3 billion
(1991: DM 9.0 billion). Contract
research, almost exclusively at
Deutsche Aerospace, accounted for
DM 4.4 billion. More than 36,000
people are employed worldwide in
the research, development and
testing sectors of Daimler-Benz.
The central division "Research
and Technology" is engaged in a
permanent dialogue with the four
corporate units of the Daimler-Benz
group, in order to assess and an
alyse their requirements for new
technologies. Following this, recom
mendations are made or specific
innovation projects launched. Focal
points of group-wide research are
propulsion technology, vehicle
design, transport technology, devel
opment of new materials and mate
rials technologies, information tech
nology and the environment.
Mercedes-Benz spent DM 3.1
billion (1991: DM 3.2 billion) on
research and development in its
Passenger Car and Commercial
Vehicle divisions in 1992.
At the Detroit Auto Show in Jan
uary, 1992, the Passenger Car divi
sion presented the new 600 SEC top-
of-the-range model. With this coupe,
which combines advanced design
with the highest levels of comfort
and safety, Mercedes-Benz now of
fers the largest range of any manu
facturer catering to the luxury car
market. Our co-operation with AMG
resulted in the course of the year in
further individualization of the pas
senger car range and led to AMG
versions being offered for almost all
our model series. In June 1992, our
sales organization presented the
new Mercedes-Benz 600 SL to the
public. With the new generation of
4-valve gasoline engines and an
extended range of standard and op
tional appointments, our mid-series
models now offer even greater value.
Further innovations were presented
at the Paris Motor Show in October,
1992, with the gasoline-driven
300 SE 2.8 and, new to Europe, the
highly economical 300 SD diesel.
During the year under review,
new products joined the Mercedes-
Benz commercial vehicle range and
product improvements were intro
duced. One of the outstanding events
of the year was the start of produc
tion of all the models in the new
0 404 generation of touring coaches.
At the beginning of 1992, the low-
floor articulated O 405 GN also went
into production. The Hanover Inter
national Commercial Vehicle Show
saw the presentation of an innova
tion with a most promising future,
the "O 100 City" minibus. This
lowfloor bus with a fiber-glass rein
forced synthetic body is tailored to
future trends in urban line-service
operation. A further addition to the
bus range for Europe was the 0 340
built by our Turkish subsidiary.
In the Unimog product sector,
the new light and medium model se
ries were introduced on the market.
The completely new U 90 to U 140 L
models replace the most successful
Unimog series to date, the U 600 to
U 1150 L, in the 4.8 to 8.5 t perm.
GVW category.
In the Commercial Vehicle divi
sion, design plays an important role
in sales and as an instrument of
competition. The commercial vehicle
study "EXT", which was shown in
May 1992 at the Hanover Commer
cial Vehicle Show, is intended for
long-haul operation and features a
design which is highly innovative
for this sector.
AEG spent DM 754 million on
research and development in 1992;
this was 12% more than in the pre
vious year (DM 672 million) and was
equivalent to more than 6% of AEG
sales. Focal areas of research during
the year under review were decen
tralized automation equipment, run
ning gear and drive systems, trans
port systems, systems and software
technology, pattern recognition, very
high frequency microelectronic com
ponents and high-temperature su
perconductors.
At DASA, DM 5.2 billion (1991:
5.0 billion), equivalent to 30% of
sales, was spent on research and
development; DM 4.3 billion of this
was spent on externally commis
sioned projects. Projects financed by
DASA itself again totaled DM 0.9 bil
lion. In the Aircraft group, the main
activities relevant to the aircraft
business were the Airbus A 330/
A 340 programs, the Dornier 328
and the European
Fighter Aircraft; the most notable
event on the helicopter side was the
completion of development work on
the German-French Tiger anti-tank
and escort helicopter. In the Space
Systems group, research and
development work concentrated on
the various ESA programs and the
Ariane program. In the Defense and
Civil Systems group, work on the
Trigat anti-tank system continued.
In the civilian sector, increased em
phasis was placed on radio and tele
vision transmitters and on traffic
management systems. In the Propul
sion Systems group, major efforts
were undertaken to ensure a
further expansion of non-military
aero-engine business in the long
term; on the diesel engine side, the
focus was on development of a new
product generation. In the field of
medical systems, work centered on
further development of existing
lithotripters and on new ultrasound
systems.
Consolidated Net Income:
DM 1.45 Billion
The consolidated income state
ment of the Daimler-Benz group for
1992 shows a net income of DM
1.45 billion. The fall of DM 0.5 bil
lion from the previous year's figure
resulted primarily from the onset of
unexpectedly difficult conditions for
vehicle business in the third quarter
of the year and from the changed op
erating environment for major areas
of the aerospace industry. Results
from ordinary business activities fell
by one third to DM 2.5 billion.
The interest expense of our leas
ing and sales financing companies
was slightly below last years' level
at DM 0.4 billion. Excluding the this
interest expense our net interest in
come amounted to DM 1.0 billion
(1991: DM 1.1 billion); the decline
was due to reduced liquidity. The
monetary adjustments made by our
subsidiaries in high-inflation coun
tries in their financial statements
have been retained in the Daimler-
Benz financial statements, effec
tively preventing the reflection of
inflationary profits.
Sound Balance Sheet Structures
The balance sheet total rose by
DM 10.5 billion to DM 86.2 billion.
This was mainly attributable to the
fact that Deutsche Aerospace Airbus
was fully consolidated for the first
time. On the assets side of the con
solidated balance sheet, both non-
current and current assets increased
in roughly the same proportion as
the balance sheet total.
On the liabilities side, the equity
ratio fell from 30 % to 28 %; the pro
portion of non-current assets cov
ered by stockholders' equity fell
from 89 % to 81 %. Neither of these
figures include the financial services
business, which is largely financed
by borrowings. Taking into account
medium and long-term provisions,
particularly pension provisions, long
and medium-term capital amount to
61% of the consolidated balance
sheet total. This is sufficient to fully
cover both non-current assets and
inventories.
As in previous years, the largest
contribution - albeit a substantially
lower one in 1992 - to consolidated
earnings was made by the vehicle
sector. The abrupt fall in demand for
both cars and commercial vehicles
in Germany and the absence of the
expected recovery in major foreign
markets had a substantial influence
on this decline. The situation was
further aggravated by the fall in the
value of currencies of major Euro
pean partner countries which signifi
cantly impaired the competitiveness
of our product prices.
Following the extremely high ex
penses of the previous year in prepa
ration for the withdrawal from office
and communication systems, AEG
achieved break-even group results in
1992, whereas operating results re
mained negative and did not reach
last years' level. Here too, business
was handicapped by static or down
ward economic trends in important
sales markets, particularly in the
second half of the year.
Deutsche Aerospace has made
extensive preparations for the ad
justments which will be necessary
due to the fall in orders already evi
dent in the year under review, par
ticularly in the defense sector. Pre
liminary outlay relating to future
business also depressed results. The
high positive contribution of
Deutsche Aerospace Airbus, which
was fully consolidated for the first
time, was not able to compensate
completely for the negative factors.
The contribution of debis to the
consolidated result was similar to
that of the previous year. This was
due above all to the again favorable
trend in earnings of the Financial
Services division. Earnings of the
Systemhaus division were nega
tively influenced by intensified com
petition in the information technol
ogy sector.
Allocation of Earnings
The net income of Daimler-Benz
AG totaled DM 5,193 million. This
figure includes extraordinary in
come of DM 4,490 million resulting
from valuation adjustments of pen
sion provisions and inventories at
Daimler-Benz AG and Mercedes-
Benz to bring them into line with the
practice which has been followed in
the Daimler-Benz consolidated state
ments since 1989.
This means that the same ac
counting and valuation methods are
on the whole now used at the differ
ent levels and within each area of
the Daimler-Benz group. This in
creases "transparency" and ensures
comparability. At the same time,
segmental reporting as required for
the future listing of our shares on
the New York Stock Exchange is
also facilitated.
At our Annual General Meeting,
we shall propose that the profits
arising from the valuation adjust
ment be transferred in their entirety
to retained earnings and so remain
in the company.
Calculated excluding income
from valuation adjustments, net in
come fell from DM 1,194 to DM 703
million. As in previous years,
Mercedes-Benz AG made by far the
largest contribution. While debis
also contributed a positive result and
AEG broke even, a loss had to be as
sumed from Daimler-Benz Luft-und
Raumfahrt Holding AG.
exchange rate factors, we must be
prepared to have to reduce output at
our German plants. The slightly bet
ter conditions in overseas markets
on the other hand will make it possi
ble to increase our foreign commer
cial vehicle production, but not suffi
ciently to compensate for the down
turn in domestic output.
In order to keep pace with in
creasingly fierce competition,
Mercedes-Benz will be redoubling
the efforts already underway to re
duce costs and improve productivity.
This will include a further reduction
in workforce numbers.
For the current year, AEG ex
pects a slight increase in its volume
of business; business in foreign mar
kets will grow somewhat more than
that in Germany. An increase in
business is expected particularly in
the Power Transmission and Distri
bution and Microelectronics fields of
activity. Research and development
work will be stepped up, as will in
vestment in fixed assets. In addition,
further co-operation and acquisitions
are planned, with a view to an all-
round strengthening in the position
of AEG.
Deutsche Aerospace expects to
achieve a sales volume similar to
that of 1992. Higher revenue can be
expected in the Aircraft group
with the deliveries of the first Airbus
A 340 aircraft to customers. Also,
the joint venture TEMIC will make a
substantially larger contribution to
the volume of business of DASA. In
the Space Systems group, we ex
pect a sharp sales rise in the Ariane
program. No other major projects
are due to be invoiced in the near
future however, so that sales will
fall considerably short of the excep
tionally high level of 1992. In the
From the net income of Daimler-
Benz AG, DM 101 million will be
transferred to the retained earnings
of the holding company, in accord
ance with Paragraph 58 of the
Companies Act. At our Annual Gen
eral Meeting on May 26, 1993, we
shall propose that an unchanged div
idend of DM 13 be paid per share of
DM 50 par value. The total dividend
amount will increase, due to the re
duction in treasury stock, to DM 604
million.
Outlook
At the start of 1993, the eco
nomic outlook in most industrialized
countries is uncertain. In the U.S.,
a further upturn in demand is ex
pected, while in Japan recovery is
not likely before the end of the year.
Economic trends in the West Euro
pean countries will differ widely, the
strongest chance of an economic re
covery being in the United Kingdom
and France. In Germany, an upturn
cannot be expected before the se
cond half of the year at the earliest.
In the first two months of 1993
sales in some areas of both commer
cial vehicles and cars were signifi
cantly below expectations. Thus
short-time working could not be
avoided. The increase in value added
tax in 1993 as well as the increase
in the tax-relevant usefull life of cars
led to many purchases in the Ger
man market being brought forward
to 1992. For the remainder of 1993
we expect positive stimuli for the
entire car range from the introduc
tion of the new compact class in the
middle of the year.
In the European Community,
there will be a decline not only in
our car sales but also in sales of
commercial vehicles from our Ger
man factories. Against the back
ground of continued depressed mar
kets and increased prices of our
products in foreign markets due to
Defense and Civil Systems group
too, it is likely that business will fall
substantially as a result of the con
tinuing unfavorable trend in orders.
In the Propulsion Systems group,
sales of civilian aero-engines will not
yet be able to compensate for the
substantial fall in military business.
An important aim of DASA in
the current year is to adapt capacity
as quickly as possible to the ex
pected fall in orders, a trend which
is likely to be considerably more
pronounced in the coming years,
particularly in the defense sector,
than was originally expected. Since
production schedules in the Aircraft
and Space Systems groups are also
declining and are beset by consider
able uncertainties, appropriate ad
justment of employee numbers in all
areas will be unavoidable.
Following lengthy negotiations,
we concluded an agreement with the
Dutch government in February,
1993, allowing us to acquire a 51%
majority holding in aircraft manufac
turers Fokker.
Daimler-Benz InterServices will
further increase its business with
customers outside the Daimler-Benz
group, a focal area being the System-
haus division, where software activ
ities will be stepped up, for the most
part in collaboration with CAP
Gemini. The Financial Services divi
sion is aiming to assume a leading
role as a supplier of integrated
solutions. The Insurance division,
debis Assekuranz, will increasingly
be establishing offices of its own in
the coming years not only in West
ern Europe but also in the American
and South East Asian regions, debis
Risk Consult and debis Marketing
Services GmbH also plan to expand
their business, debis Handel will in
crease its activities, particularly in
the area of barter trade, through the
establishment of additional foreign
offices in important counter-trade
markets, debis expects to substan
tially increase its total output in
1993.
With the help of the joint ven
tures which were formed in 1992,
it is our intention to improve our
performance, to reduce costs and to
offer new products on the market.
We expect these joint ventures to
exhibit a high level of growth in the
coming years. This applies partic
ularly to the field of transport and
traffic management systems, where
intelligent, future-oriented solutions
are increasingly in demand.
We shall continue the cost-
cutting programs already underway;
the high wage levels in Germany
compel us to introduce leaner pro
duction structures. The expansion of
production capacity abroad will
therefore assume increasing impor
tance.
The number of hierarchical
levels within the companies of the
group is being reduced, with the aim
of shortening decision-making pro
cesses and increasing the motivation
of our employees. Overall, we expect
sales to remain static in the 1993
financial year, with a further decline
in earnings.
Corporate Unit Mercedes-Benz
*) 1992 figure comparable.
Due to the unfavorable business
environment, Mercedes-Benz was
unable to maintain its positive trend
of the previous years. Consolidated
sales were 1% below those of the
previous year, at DM 66.5 billion.
Sales revenue of the Commercial
Vehicle division fell by 3% to DM
26.9 billion, whereas that of the
Passenger Car division matched its
high level of the previous year at
DM 39.6 billion.
Sales of Mercedes-Benz in the
European Community fell by 5% to
DM 41.5 billion. This result was in
fluenced by the unfavorable trend in
the German market, where sales fell
by 5% to DM 29.2 billion. In coun
tries outside the EC, the volume of
business increased by 6% to DM
24.9 billion. Large increases were
recorded in South East Asia, the
United States and Central America.
At Mercedes-Benz, as through
out the automotive industry, adjust
ments in employment numbers had to
be made, in response to the eco
nomic and structural difficulties fac
ing the world automotive industry at
the present time. At the year-end, the
number of employees in the group
had fallen to 222,482 (1991:
237,442), 10,752(1991: 11,104) of
whom were apprentices and
trainees. The workforce of Mercedes-
Benz AG declined by 14,981 to
169,080 employees. The car plants,
the commercial vehicle plants, the
sales division and the administrative
headquarters all saw a fall in
employee numbers.
In order to respond more quickly
and more flexibly to changes in the
company's operating environment
and to more intensive competition,
Mercedes-Benz produced plans for a
revised management structure,
implementation of which began in
January 1993. With the creation of
product and service centres, each of
which is accountable for its own
results, all areas of the company are
being geared more closely to the
market and to the needs of the
customers.
Mercedes-Benz invested DM 4.2
In the Commercial Vehicle division,
our worldwide investment again
totaled more than DM 1 billion. DM
0.6 billion, over half the total, was
invested at the factories in Germany.
Here we concentrated on additions
to our product range and on the in
troduction of new technologies. Out
side Germany, the emphasis was on
renewal of the vehicle ranges and on
a modernisation and expension of
our production plants.
A total of DM 3.1 billion (1991:
DM 3.2 billion) was spent on re
search and development in the Pas
senger Car and Commercial Vehicle
divisions, much of this, as in the
past, in the environmental and
safety fields.
Due to the difficult conditions in
the most important markets, a slight
recovery is the most that can be ex
pected for sales of the Mercedes-
Benz cars in the second half of 1993.
For commercial vehicles, we expect a
further decline in demand in Western
Europe, while the growth in our
overseas sales and production will
probably continue.
billion (1991: DM 4.1 billion) in
fixed assets in 1992; DM 3.6 billion
(1991: DM 3.3 billion) of this spend
ing took place at locations in Germany.
As in past years, the emphasis was
on the Passenger Car division,
where at DM 2.7 billion the substan
tial investment volume of the
previous year was maintained.
Depressed World Car Markets
The recovery in important car
markets which had been expected
for 1992 did not come about, due to
the low level of world economic
activity. In Western Europe and the
U.S., sales were static, while in
Japan new registrations fell. The post-
reunification boom in the German
market came to an end and the mar
ket has returned to a normal level.
Although world production of
passenger cars matched the volume
of the previous year, plant utilization
declined further, due to the con
tinued build-up of manufacturing
capacity. Increasing employment
problems, falling profits and fiercer
worldwide competition in all market
segments set the tone for the world
car industry.
Increased Foreign Sales
Export sales of Mercedes-Benz
increased by 2% to 288,500 cars; in
Germany's partner countries of the
European Community, they almost
matched those of 1991. Although
our sales in Italy fell by 8%, 1992
was our second best year for busi
ness in this market. Our sales in
France were 5% below the previous
year's level, while in the United
Kingdom we achieved an increase of
more than 8% despite the continuing
recession. In Spain too, our car sales
were gratifying, continuing the up
ward trend which has been main
tained ever since 1985.
With sales of 63,300 Mercedes-
Benz cars (+ 8%), the trend in our
U.S. business was generally pleasing.
Our S-class was awarded the 1992
U.S. Environment Prize by the
Environmental Protection Agency;
this series increased its share of the
"high luxury" segment to 41%
(1991:37.5%).
Federal Republic of Germany:
Fall in Demand Accelerates
During the Year
After record volumes in 1991,
swollen by exceptional factors, the
German car market rapidly lost mo
mentum during the year under re
view. New registrations nevertheless
totaled approximately 3.9 million
cars (- 6%), the fall being attributable
exclusively to the West German
States. This volume, which was still
high on a long-term comparison, was
overshadowed however by a plunge
in domestic orders from the early
summer onwards and by a build-up
of stocks of new and used vehicles.
Mercedes-Benz:
Slight Increase in Car Sales
Despite the unfavorable overall
conditions, car sales of Mercedes-
Benz increased slightly in 1992 to
DM 39.6 billion. Growth momentum
came chiefly from overseas markets,
the volume of business in the EC
being 2% below the level of the
previous year.
Mercedes-Benz was unable to
escape the general downward trend
in the German vehicle market. New
registrations of Mercedes-Benz cars
fell to 239,000 units (1991: 270,400
units); the new Federal States
accounted for 4% of this total, or
10,100 units (1991: 7,700 units).
74,000 (1991: 96,100) Mercedes
compact models were newly regis
tered in Germany. New registrations
of the mid-series fell to 130,300 ve
hicles (-10%). New registrations of
our S-class increased by 12% to
22,400 vehicles. Our SL models too
continued to enjoy high popularity
in Germany, with 11,900(1991:
7,500) cars sold. The new S-class
coupes only became available on the
market towards the end of the year
under review.
We too were affected by the
downturn in the Japanese car mar
ket, although we nonetheless main
tained our position as the leading
imported marque. Our business in
the Far East outside Japan showed a
very positive trend. We also
achieved relatively high growth in
the Middle East and Australia.
Due to the low overall level of
demand, Mercedes-Benz cut back its
car production to 529,400 units
(1991: 578,000 units). The reduced
production particularly affected the
compact series (- 17%), where a
model change was imminent. 7%
fewer mid-series vehicles were
produced, while production of the
S-class, the coupes and the SL
models increased by 6%.
Additions to the Model Range
The outstanding newcomers to
the Passenger Car division were the
500 SEC and 600 SEC S-class
coupes, which made their world de
but at the Detroit Auto Show in Janu
ary 1992. At the 77th Paris Motor
Show, the 300 SE 2.8 and 300 SD
S-class models, the 600 SL, the 400
E and the enhanced mid-series
models with new 4-valve engines
were presented to the public.
Also in Paris, our S-class was voted
"The World Car 1992" by an inter
national jury of motoring journalists
from Western Europe, Japan and
the U.S.
Highest Safety Levels
as Standard Specification
The high active and passive
safety standards of our vehicles
were raised still further by a number
of measures during the year under
review. Since autumn, 1992, all
Mercedes-Benz passenger cars have
been fitted as standard with the
driver's airbag. On account of the
considerably superior protection it
provides, we fit a "full-size" airbag
in our vehicles and not the smaller
"Euro-airbag". On various models,
the front passenger's airbag too is
included in the standard specifica
tion. Further improvements in safety
are being developed as a matter of
utmost priority.
DM 2.7 Billion Invested
to Safeguard the Future
In 1992, we invested DM 2.7 bil
lion in the Passenger Car division to
secure the company's future opera
tions in the long term, the highest
spending level in the history of the
company. Principal objects of invest
ment were the car assembly plant in
Rastatt, preparations for production
of the new compact series and the
4-valve gasoline and diesel engines
and introduction of water-based
paints in further areas of our manu
facturing.
Strong Performance
in the German Touring Car
Championships
1992 was a year of records in
the German Touring Car champion
ship. More spectators and wider re
porting than ever before were proof
of the popularity of this series.
Mercedes-Benz played a leading role
in the 1992 season, winning 16 of
24 races. Klaus Ludwig, in the AMG
Mercedes-Benz 190 E took the
Championship title, followed by Kurt
Thiim and Bernd Schneider, a suc
cess unrivalled by any other compet
itor in this fiercely contested series.
Outlook
Given the difficult conditions in
almost all major car markets, we ex
pect at the most a slightly more posi
tive trend in sales of Mercedes-Benz
cars in the second half of 1993. The
first two months of 1993 were sub
stantially below our expectations for
car sales in Germany. The introduc
tion of our new compact series
should lend sustained impetus to
our sales.
On May 25, 1992, the Rastatt
plant, third car assembly plant of
Mercedes-Benz AG was inaugurated.
This forward-looking move will safe
guard the long-term competitiveness
of our German-based operations. In
terms of productivity, flexibility,
product quality and environmental
compatibility, the Rastatt plant will
serve as a model for all the other
Mercedes-Benz plants.
Further Progress Towards Shorter
Development Cycles
In addition to price and quality,
the traditional components of com
petition, questions of time-scale and
innovation are now also acquiring
ever greater importance. Using
modern development management
methods with a strong emphasis on
an interdisciplinary approach we are
in a position to face these chal
lenges.
Close coordination takes place
between the research, development,
sales, marketing, production engi
neering, materials management and
business management sectors when
new products are designed. In the
development phase, teams are set
up for the various components of the
vehicle, in which development and
production engineering staff work
side by side. The result is shorter
development times compared with
the previous sequential ordering of
the development and production
engineering processes.
Weak
Commercial Vehicle Markets
in Western Europe
Conditions were generally diffi
cult in the most important commer
cial vehicle markets in 1992. The
markets in Italy, the United Kingdom,
France and Scandinavia were partic
ularly weak; competition on prices
and terms again intensified. In con
trast to the generally declining trend
in Europe, a recovery took place in
commercial vehicle business in the
US, particularly in the heavy-duty
segments. The markets in Mexico
and Argentina continued to grow. In
Brazil however, continuing political
and economic uncertainty led to a
considerable fall in demand. Al
though the worldwide production of
the commercial vehicle industry in
creased by 3% to 12.5 million vehi
cles, production in Western Europe
of trucks over 6 t fell by 10% to
299,000 units.
End of Post-Reunification
Boom in Germany
The post-reunification boom in
Germany which continued into the
first part of 1992 came to an abrupt
end in the middle of the year. Due to
the buoyancy of the first half of the
year however, the market showed an
increase for the eighth consecutive
year, with new registrations of com
mercial vehicles totaling 337,100
units (+ 1%). The growth was largely
fuelled by the market for vans and
trucks up to 6 t. In the truck seg
ment over 6 t, however, 98,700 vehi
cles were newly registered, 6% fewer
than in 1991.
Mercedes-Benz Maintains Market
Position in Western Europe
Due to the unfavorable condi
tions in important markets,
Mercedes-Benz was unable to main
tain its positive trend of 1991.
Sales of the Commercial Vehicle
division fell by 3% during the year
under review to DM 26.9 billion.
Business in the German market fell
by 10% to somewhat below DM 11
billion, while business abroad rose
to DM 15.9 billion (1991: DM 15.5
billion). With worldwide sales of
94,000 trucks (1991: 109,400
trucks) over 6 t, we maintained our
position as world market leader in
this segment.
Due to the low level of demand
in the second half of the year, new
Mercedes-Benz registrations in
Germany fell to 109,800 commercial
vehicles, 10% below the record
volume of 1991.
Exports from our German facto
ries fell by 2% to 78,200 units. Nev
ertheless, we held our West European
market share for trucks over 6 t
at the previous year's high level
of 31%.
Due to the unsatisfactory situa
tion in the West European markets
and the fall in demand in Germany,
we had to reduce production at our
German factories by 13% from the
exceptionally high level of the pre
vious year, to 164,600 vehicles. The
adjustments in production levels
affected particularly the Worth and
Diisseldorf assembly plants but also,
after a time-lag, Mannheim,
Gaggenau and Kassel, which build
major assemblies for commercial
vehicles.
Increased Production
at Foreign Companies
With an increase of 5% to
112,800 units, production at the
foreign companies in the Mercedes-
Benz group reached its highest level
ever. Our American company
Freightliner, whose production in
creased by 33% to 33,300 trucks,
made a substantial contribution to
this. In the fiercely contested U.S.
market for heavy Category 8 trucks
(upwards of 15 t gvw), Freightliner
moved into the lead for the first
time, with a market share of 23%.
A pleasing trend in business
was also recorded at our companies
in Mexico, Argentina and Turkey.
Due to the unfavorable situation in
its home market, Mercedes-Benz do
Brasil had to cut back production
substantially, despite increased
exports.
Mercedes-Benz Espafia was hit
by the weakness of the West
European markets; following an
increase of 26% in the previous year,
production had to be cut back
by 6% to 26,500 vans.
Group commercial vehicle
production of Mercedes-Benz fell in
1992 by 6% to 277,300 units from
the high level of the previous year.
Our foreign companies increased
their share of production from 36%
to 41%.
Leading Manufacturer
of Buses Over 8 t
In 1992, group production of
Mercedes-Benz buses and bus
chassis totaled 29,000 units (1991:
28,600 units). We thus maintained
our position as the world's leading
manufacturer of buses over 8 t
permissible gross vehicle weight.
Mercedes-Benz buses in this cate
gory set a new record in 1992 for
registrations in Germany, at 2,500
units (+ 40%). At our Mannheim
plant, the last O 303 model left the
assembly line after a production run
lasting 18 years. 38,000 O 303's
were sold, making this the world's
most successful touring coach. Pro
duction of the new O 404 coaches
started at the beginning of 1992.
Increased Unimog Sales
Our Unimog sales rose during
the year under review to 4,600 units
(1991: 4,100 units). Major orders,
notably from China and Greece,
more than compensated for the fall
in sales in Germany and important
world markets due to economic con
ditions. 650 (1991: 550) of the 2,300
(- 5%) vehicles sold in Germany were
supplied to customers in the new
Federal states.
New Products and
Product Improvements
Increased Collaboration with
SsangYong Motor Company
During the year under review,
new products joined the Mercedes-
Benz commercial vehicle range and
product improvements were intro
duced. The overall philosophy is to
offer at all times the very latest state
of the art in environmentally com
patible, economical and individually-
tailored transport solutions.
The outstanding event of the
year in the bus sector was the start
of production of all the models in the
new 0 404 generation of touring
coaches, which was presented at the
end of 1991. Reactions from cus
tomers have been universally posi
tive. At the beginning of 1992, the
low-floor articulated 0 405 GN also
went into production. The Hanover
International Commercial Vehicle
Show saw the presentation of an in
novation with a most promising fu
ture, the "0 100 City" minibus. This
completely new low-floor bus, devel
oped in cooperation with a Dutch
design and development center, is
tailored to future trends in urban
line-service operation. A further
addition to the bus range for Europe
was the 0 340 built by our Turkish
subsidiary.
In the Unimog sector, the 1992
financial year saw the production
and market launch of the new light
and medium Unimog series. From
the outside, these models are distin
guished by the new spacious safety-
design driver's cab, with an engine
hood which slopes more sharply on
the driver's side to give a better
view when working.
Mercedes-Benz AG and South
Korea's fourth-largest vehicle manu
facturer, the SsangYong Motor Com
pany (SYMC) concluded an agree
ment on co-operation in October,
1992. This means that in addition to
license production of diesel engines
and vans as provided for in an earlier
agreement, SYMC will as of 1994 be
able to produce Mercedes-Benz gaso
line engines under license. By this
long-term cooperation, which was
initiated in 1991, it is our intention
to create an improved position from
which to serve the South East Asian
market. To reinforce the partnership,
Daimler-Benz AG has acquired a 5%
holding in the capital stock of SYMC.
From 1994, more than 100,000
Mercedes-Benz gasoline and diesel
engines will be produced annually
on jointly designed production facili
ties at the Changwon plant.
Outlook
The prospects for the commer
cial vehicle markets at the begin
ning of 1993 are not good. Only a
substantial recovery in the West
European volume markets and over
seas markets would be capable of
compensating for the continuing
slowdown in the German economy,
where we experienced marked sales
declines in the first two months of
1993.
The Mercedes-Benz Commercial
Vehicle division faces still fiercer
competition due to the Single
European Market. In the coming
years, we shall therefore have to
exploit all possible means of pre
serving and strengthening the
competitiveness of our German-
based operations.
We hope to improve on the
record 112,800 units produced by
the foreign commercial vehicle com
panies of the Mercedes-Benz group
in 1992 and further strengthen our
position as the world market leader
for trucks over 6 t.
Corporate Unit AEG
Despite the weakness of the
West German electrical engineering
market, the AEG group recorded an
increase in the volume of business
in important areas of operation, par
ticularly Rail Systems and Power
Transmission and Distribution.
Sales of the AEG group rose by
8% on the comparable figure for the
previous year to DM 11.6 billion.
Revenue from sales in Germany rose
by 11% to DM 6.8 billion, while for
eign business increased by only 3%.
The earnings trend of the AEG
group did not come up to expecta
tions. This was due to static or reces
sive economic conditions in impor
tant sales markets, particularly in
the second half of the year. Overall
therefore, operating results did not
match the level of 1991. Postal
Automation made a substantial
profit; the Electrotechnical Systems
and Components field of activity
improved on its good position and
achieved positive results; Rail Sys
tems improved its earnings substan
tially and almost broke even, while
the Domestic Appliances field of
in Nuremberg. Large-scale invest
ment also took place at TEMIC for
the production of integrated circuits
in Heilbronn and airbag production
in Aschau.
The AEG group spent DM 754
million on research and develop
ment in 1992, a rise of 12% on the
comparably calaculated figure for
the previous year. Focal areas of
research in the year under review
were decentralized automation
equipment, running gear and drive
systems, transport systems, systems
and software technology, pattern
recognition, very high frequency
microelectronic components and
high-temperature superconductors.
On July 1, 1992, AEG's subsid
iary TELEFUNKEN electronic GmbH,
Heilbronn, and its affiliated com
panies were brought into TEMIC
TELEFUNKEN microelectronic
GmbH together with the micro
electronics activities of Deutsche
Aerospace AG (DASA). AEG and
DASA each have a half share in this
company, which they are consolidat
ing on a pro rata basis in their
financial statements.
For the current year, 1993, AEG
expects to slightly increase its vol
ume of business, particularly in the
Power Transmission and Distribu
tion and Microelectronics fields of
activity.
activity improved on the profits of
the previous year. In Industrial
Automation, the motors sector and
Microelectronics, earnings remained
negative or worsened, due in part,
to considerable burdens.
Provisions contained in the 1991
financial statements for the with
drawal from office and communica
tion systems could in part be cred
ited to income, thus contributing to
an increase of DM 63 million in the
result from ordinary business activ
ity, which stood at DM + 8 million.
Incoming orders of the AEG
group totaled DM 12.1 billion in the
year under review, an increase of
over 6% on the comparable figure for
1991. This increase was achieved
solely in the German market, where
demand increased by 16% to DM 7.4
billion. Export orders fell by 6%.
At the end of 1992, AEG
employed 60,784 people around the
world, 46,559 of them in Germany.
50% of the employees of TEMIC
TELEFUNKEN microelectronic
GmbH are included in this figure.
As in 1991, AEG invested a total
of some DM 1.8 billion in intangible
assets, fixed and financial assets,
research and development and
training, equivalent to 15% (1991:
13%) of total output.
Including the non-current assets
taken over from newly acquired
companies, investment by AEG in
1992 totaled DM 916 million (1991:
DM 943 million). The additions to
fixed assets, which totaled DM 765
million (1991: DM 872 million),
include DM 113 million (1991: DM
270 million) of additions outside
Germany. DM 98 million (1991: DM
43 million) was invested in related
companies. Investment activity fo
cused on factory renewal at AEG
Starkstromanlagen Dresden and
AEG Schienenfahrzeuge in Hennigs-
dorf, modernization of the Sickin-
genstraBe site in Berlin and the
completion of rehabilitation work at
MAN GHH Schienenverkehrstechnik
"National Institute of Standards and
Technology". In a competition in
which all the major suppliers of sys
tems for the automatic reading of
handwriting were represented, AEG
won two first prizes for upper and
lower case characters.
In the current financial year, we
expect the Automation field of activ
ity to achieve a similar volume of
business to that of 1992.
Electrotechnical Systems
and Components:
Substantial Increase in Sales
The Electrotechnical Systems
and Components field of activity
comprises the divisions Power Trans
mission and Distribution and Compo
nents. Once again, the volume of
business increased, although some
important markets remained
depressed.
Sales of the Power Transmission
and Distribution division exceeded
those of 1991 substantially, while
incoming orders matched the high
level of that year. In high-voltage
systems, activity focused on enlarge
ment of the product range. As busi
ness became increasingly interna
tionalized, the new plant of AEG's
affiliate E.I.B. in Dison, Belgium, was
opened in May. Investment in the
new plant totaled some DM 40 mil
lion. Besides medium-voltage sys
tems, the company produces high-
voltage switchgear and circuit
breakers. With the acquisition of
AEG TRO Transformatoren und
Schaltgerate GmbH, Berlin, and the
Polish company MEFTA sp.z.o.o.,
Mikolow, the transformers sector
was strengthened substantially. In
the Components division, increases
were achieved in the area of power
supplies for data processing and
telecommunications, emergency
power supply systems and unit-type
heating power stations, power me
ters and lighting systems. On the
other hand, the difficult market af
fected sales of electrical machinery.
With effect from July 1, 1992, AEG
acquired Starkstrom-Anlagenbau
Magdeburg GmbH.
The Electrotechnical Systems
and Components field of activity
expects the level of business to in
crease slightly in 1993.
Rail Systems:
Sharp Rise in Business Volume
The Rail Systems division com
prises the divisions Integrated Rail
Systems, Mainline Railroads, Mass
Transit and Railcars and Mass Transit
and Railcars America. Business vol
ume increased by 48% during the
year under review. This sharp rise is
partly a reflection of successful per
formance in an expanding market,
while the acquisition of AEG Schie-
nenfahrzeuge GmbH in Hennigsdorf
on January 1, 1992, has also re
sulted in a strengthening of busi
ness. AEG played a large part in the
further expansion of the ICE high
speed system introduced in Germany
in 1991, supplying products
and systems both for the trains and
for track installations. For the new
Shanghai metro, a German consor
tium headed by AEG supplied the
first of an ordered 16 metro trains,
each consisting of six parts, along
The Automation field of activity
comprises Industrial Automation -
with the three divisions Products
and Basic Systems, Systems Tech
nology and Support, Industrial
Systems - and Postal Automation.
Business volume matched the high
level of the previous year.
In October 1992, the new AEG
Automation Centre, the "Geamatics
House", was opened in Frankfurt-
Niederrad. The Geamatics House
serves as a know-how focus for the
entire field of activity and as a co
ordinating center for international
activities.
In Industrial Automation, MODI-
CON, based in Andover/U.S. and
Seligenstadt, further increased its
business in the field of programm
able logic control (PLC) systems. In
the US, MODICON received the
"NEMA Renewal Award" for the
most successful innovation in PLC
technology and for its modern, rati
onal manufacturing. In the Industrial
Systems division, AEG presented the
"Geamatics P/E/N" control system
for the automation of processes,
power supply systems and networks,
along with the corresponding "View-
star 750" operating and viewing sta
tion. The new system met with a
good response from the market. In
Postal Automation, AEG Electrocom
GmbH (AEC) further strengthened
its leading market position in the
US, Canada and Western Europe in
1992 and expanded its position in
the Far East and Latin America. Tes
timony to the outstanding status of
AEC technology is provided by two
awards conferred by the American
Microelectronics Activities
Transferred to TEMIC
The Microelectronics field of
activity comprises TEMIC TELE-
EUNKEN microelectronic GmbH, a
joint venture between AEG and
Deutsche Aerospace AG, and the
Opto- and Vacuum Electronics divi
sion. Sales showed a slight rise on
the previous year. More information
about TEMIC is contained in the
chapter "Joint Ventures".
Business in the Opto- and Vac
uum Electronics division was unsat
isfactory. This was mainly due to the
considerable decline in demand for
defense technology. In response to
this, activity was stepped up in new
fields of work, including large-
format liquid-crystal displays, identi
fication systems for the registering
and recognition of masses and a
high-performance battery, at present
intended primarily for use in the
automotive sector.
with traction contact systems and
power substations. Low-floor street
car business continued to flourish.
In the field of automated people
mover systems, the group was able
to improve on its leading world
position once again.
Business in the Rail Systems
field of activity is expected to remain
at the previous years' level in 1993.
Domestic Appliances:
Slowdown in Growth
AEG Domestic Appliances in
creased its sales by 2% to DM 2,653
million in the year under review. In
Germany, further growth in business
was recorded, assisted particularly
by the newly launched range of floor
vacuum cleaners and microwave
equipment and also the high-quality
front-loader washing machine series.
AEG increased its market share in
these product areas. In line with the
general market trend, export sales
fell slightly short of their 1991 level.
In June, 1992, AEG Aktiengesellschaft
and the Swedish group Electrolux
AB approved plans for long-term co
operation in the field of electrical do
mestic appliances. With this cooper
ation, the partners are aiming above
all to substantially improve their
cost structures and thus strengthen
their competitive position.
For 1993, the division is aiming
to increase sales on the basis of
innovative products such as energy-
saving washing machines and refrig
erators and a floor vacuum cleaner
made of recycled materials.
Sales by Regions
AEG Group
DM 11.6 Billion (1991: DM 10.8 Billion)
Corporate Unit Deutsche Aerospace (DASA)
In the year under review, the
activities of Messerschmitt-Bolkow-
Blohm (MBB) and Telefunken Sys-
temtechnik (TST) were combined
with those of the old Deutsche Aero
space. The newly created Deutsche
Aerospace AG (DASA) will form the
core company for the operative busi
ness of the aerospace corporate unit
of the Daimler-Benz group. Further
more, we acquired the 20% stake
held by the Kreditanstalt fur Wie-
deraufbau in Deutsche Aerospace
Airbus GmbH earlier than originally
planned and were able to integrate
this company, which was previously
consolidated at equity, fully into the
group, retroactively as of January 1,
1992.
In parallel with this restructur
ing, we also continued the process of
organizational streamlining and cost
reduction. In the civilian energy and
industrial systems division similar
activities of Dornier, MBB and TST
were combined; the structural con
cept for the Space Systems group
was fully implemented.
Substantial Decrease
in Sales and Orders Received
in the Aircraft Group
*) 1991 including the employees of the
Eurocopter Group (626 people).
Sales in the Aircraft group at
DM 7.5 billion, nearly reached the
volume of the previous year. At DM
5.0 billion orders received, however,
were substantially below last year's
level.
The Deutsche Aerospace Airbus
produces and delivers assemblies
within the framework of the European
Airbus program. In the year under
review, the Airbus consortium
chalked up orders for 136 aircraft;
on the other hand there were also
cancellations of orders. The order
backlog of 836 aircraft, however, is
still satisfactory.
The final assembly start-up for
the first Airbus A321 on June 15,
1992 in Hamburg represents a
major milestone in expanding the
Deutsche Aerospace Airbus capa
bilities. The Airbus A330, the
world's largest twin-engine medium/
long-haul airliner, performed its
maiden flight on November 2, 1992.
The four-engine A340 is designed
for extreme long hauls with ranges
from 12,500 to 14,000 km. Subse
quent to type certification, the first
A340 was delivered to the German
airline Lufthansa in early February
of 1993.
It was a good business year for
the Aircraft Service Center (ASC) in
Lemwerder, where the focus was on
product support for the Airbus
family.
In mid 1992 we transferred our
microsystems and vehicle safety ac
tivities to TEMIC TELEFUNKEN mi
croelectronic GmbH, a joint venture
in which Deutsche Aerospace and
AEG each have a 50% stake. We con
tinued during the year under review
to pursue intensively our aim of in
creased collaboration with the CIS
countries in the field of aviation and
of participation in the ESA's planned
space programs.
In February 1993 we reached an
agreement with the Dutch govern
ment to acquire a 51 % majority
stake in the aircraft manufacturing
company Fokker. As an integral part
of the Aircraft group of Deutsche
Aerospace, Fokker will take over
the systems management for the
segment of the 65 to 120 seater
regional jets.
At DM 17.3 billion, consolidated
sales of Deutsche Aerospace in
creased by 3 % in the year under
review. The group results for the
year declined to DM -341 billion. At
DM 12.5 billion, orders received
were substantially below last year's
value of DM 15.1 billion.
In 1992 we invested DM 1.1
billion (1991: DM 1.0 billion) in
fixed assets. DM 5.2 billion (1991:
DM 5.0 billion), representing 30 % of
sales, was spent on research and de
velopment work, of which externally
commissioned projects accounted for
DM 4.3 billion. At the end of the
year, the DASA group employed
81,872 people (1991: 83,605). The
fall largely reflects the unfavorable
trend in business in virtually all
areas.
In the current financial year, we
expect the DASA group to achieve a
sales volume similar to that of 1992.
Higher revenue can be expected
particularly in the Aircraft group. In
the Space Systems as well as the
Defense and Civil Systems groups,
sales will be considerably lower.
An important aim in the current
year is to adapt capacity as quickly
as possible to the expected further
fall in orders.
The military aircraft division
focused once again on the EFA and
Tornado programs. The first Euro
pean Fighter Aircraft body prototype
was completed in Manching in the
first half of 1992. Technical develop
ment and logistics support is the
main focus in the Tornado program.
Further progress was made in
the German-American Experimental
Program X-31A. Another future-
oriented project is the development
of the Fan Ranger, a light jet trainer
designed to train future pilots.
The regional aircraft division de
livered 10 (1991: 18) Dornier 228's
in the year under review. Prepara
tion for the series-production start
up of the Dornier 328 in early 1993
has been for the most part con
cluded. The aircraft product support
focussed on the service-life-
prolongation program for the Bell
UH ID helicopter. In the year under
review, 37 helicopters were retro
fitted.
The product line of the Eurocop-
ter group ranges from single-engine
light helicopters through twin-
engine light and medium-weight
helicopters on to heavy transport
helicopters.
One outstanding event in 1992
was the signing of the development
contract for the tactical transport
and naval helicopter NH90. Larger
orders were under way in the pro
grams AS 355 Fennec and PAH-1.
Test flights were continued on
schedule with the first prototype of
the Tiger, a Franco-German escort
helicopter currently in the develop
ment phase.
Strong Increase in Sales
at the Space Group
Defense and Civil Systems
Group: Further Decline
of Orders Received
1992
S a l es (Millions of DM)
3 , 6 24
Sales proceeds from the year
under review were up 27 % from the
comparatively low value of the pre
vious year to DM 1.9 billion. Orders
received reached a level of DM 1.7
billion.
The outstanding scientific pro
grams are currently the ERS-2 and
Cluster satellite projects. In both
programs Dornier, functioning as
systems manager, is responsible for
the development and construction of
subsystems for the scientific payload
as well as for satellite integration.
The European Infrared Space Ob
servatory ISO is designed to meas
ure the infrared radiation of cosmic
objects. We are responsible for the
German share in this ESA project
and have developed the focal instru
ment Isophot.
In the Polar Platform ESA pro
ject we are participating in the de
velopment of the Payload Equipment
Bay (PEB), which comprises systems
that are important to the operation of
the accompanying payloads.
In the European Ariane 4
launcher program we manufacture
liquid fuel supplementary.rockets,
the second stage engine as well as
the thrust chambers in the HM7 en
gine for the launcher's third-stage
engine.
Eureca (European Retrievable
Carrier), Europe's first free-flying,
retrievable experiment platform,
was prepared for launch in the year
under review and transported into
space in late July by the space shut
tle Atlantis. Integration work for the
Spacelab-D2 mission was concluded
on schedule, so that it will be
equipped for launch in the first
quarter of 1993.
In 1992, the entire group
was marked by a substantial
decrease in orders; compared to the
previous year's level a reduction of
14 % to DM 2.4 billion (1991: DM
2.8 billion) was recorded. Sales, on
the other hand, increased by 6 % to
DM 3.6 billion.
Major impulses were rendered
by the Stinger program, for which
the preparatory phase was con
cluded and settled, and by the Ro
land anti-aircraft systems, of which
we produced further units for the
German Air Force and Navy. Major
sales revenues were also recorded
by the Milan and Hot as well as
Trigat anti-tank systems.
We received an order from
British Aerospace for a fiber gyro
we developed. It was the first order
placed for the series-production of
such a product worldwide.
In the field of Broadcasting and
Television Transmitters a number of
long-term projects in Spain and the
Near East are underway. We again
manufactured and delivered a large
number of mobile HF/VHF commu
nications intelligence systems for
the German and Dutch armed forces.
Thanks to a contract concluded with
the Ministry of the Interior of Baden-
Wlirttemberg in 1992, we managed
to become a participant in the prom
ising civil sector of official communi
cations with the fast adaptive radio
communications system Farcos.
The most significant sales in the
Command and Information Systems
division were once again made by
the series-deliveries of the drone CL
289 reconnaissance system to the
French and German armies.
Sales by Regions
DASA Group
DM 17.3 Billion (1991: DM 16.8 Billion)
MTU Maintenance GmbH main
tains and repairs large civil engines
as well as stationary gas turbines.
Parts repairs are also effectuated.
MTU Friedrichshafen is a lead
ing supplier of complete propulsion
systems, primarily for ships, rail ve
hicles, electrical generation systems
and heavy trucks and construction
equipment.
A focal point in engine sales was
once again the universal Series 396
diesel engine. In the field of propul
sion systems for ships we are, for
example, currently outfitting ships
from the Australian, New Zealand,
Norwegian and German navies. In
the railroad sector we modernized
twenty ex-GDR locomotives, each ve
hicle receiving two twelve-cylinder
Series 396 diesel engines.
In 1992Kuhnle, Koppund
Kausch Aktiengesellschaft sold con
siderably more turbochargers than
in the preceding year. Also matching
the high level of the previous year's
business results were the injection
systems for medium- and high-speed
diesel engines produced by L'Orange
GmbH.
Medical Systems as the Focus
of Other Activities
At DM 256 million (1991: DM
267 million) sales in medical sys
tems remained below last year's
level. A declining trend for lithotrip-
ters was contrasted by an increase
in our ultrasonic and laser business.
Towards the end of the year we in
troduced a new ultrasonic color im
aging device into the market.
The activities of TEMIC are cov
ered in the chapter "joint Ventures".
In the area of Environmental
Technology we continued to expand
our activities in regional and envi
ronmental planning, environmen
tal monitoring and information sys
tems, waste-water technology and
the disposal of hazardous military
materials from the past.
We renewed the lighting and
power supply for the main runway
at the Berlin-Schonefeld airport, and
it was under our systems manage
ment that the world's largest
runway-lighting system was in
stalled at the new Munich 2 airport.
Positive Development in Sales
in the Propulsion Systems
Group
At DM 3.6 billion, sales in
the Propulsion Systems group
were slightly above the level
of 1991. The DM 2.8 billion level of
orders received was considerably
lower than that of the previous year.
In the PW305 program a jet en
gine for business airplanes, MTU
Munchen already delivered over 130
low-pressure turbine modules to
Pratt & Whitney Canada by the end
of 1992.
An important contributor to
sales in 1992 was the engine family
CF6 from General Electric, for whom
we manufacture parts of the high-
pressure turbine and the com
pressor. These engines are used in
aircraft from Airbus Industrie,
Boeing and McDonnell Douglas.
Series-production of the Tornado
engine RBI 99 was phased out in
late 1991, resulting in a substantial
decrease in sales in this program in
comparison to the previous year.
United Airlines ordered 100
Airbus A320's with V2500 jet en
gines during the year under review.
All in all, this major contract encom
passes 222 jet engines.
Corporate Unit Daimler-Benz InterServices (debis)
debis increased its total output
in the year under review by 33% to
DM 7.9 billion. This figure com
prised sales revenue of DM 7.3 bil
lion and interest income from sales
financing of DM 0.6 billion.
The growth was generated above
all by the Systemhaus, Financial Ser
vices and Trading divisions; at 72%,
the largest contribution to business
was once again made by the Finan
cial Services division.
debis generated 48% of its total
business volume in Germany, 12% in
other EC countries, 31% in the U.S.
market and 9% in other markets.
Business with external customers
accounted for 79% (1991: 77%) of
total business in the year under
review. In addition to the Financial
Services division, which is tradi
tionally involved to a great extent on
the external market, the other divi
sions too increased their turnover
with companies outside the Daimler-
Benz group.
At DM 122 million (1991: DM
123 million), the consolidated net in
come of debis for 1992 approached
the high level of the previous year.
The strategic alliance with the
French software group Cap Gemini
Sogeti which entered into effect in
the year under review lent strong
impetus to the internationalization
of our business activities. With the
amalgamation of the software pro
ject and product activities of System
haus and the German Cap Gemini
SCS at the turn of 1991/1992, the
spectrum of services has been
extended and our proximity to the
customer and ability to provide
integrated system solutions further
improved.
With the start of the 1992 finan
cial year, the full spectrum of infor
mation technology (IT) services was
grouped into three subdivisions;
debis Systemhaus CCS Computer-
Communication-Services contains
the non sector-specific, horizontal IT
services. These include computer
center and network operation, instal
lation and support of distributed sys
tems, backup or business continuity
services and maintenance services.
In the Cap debis Software und Sys
tems subdivision, the software activ
ities of debis Systemhaus and the
former German Cap Gemini SCS are
grouped together. The third subdivi
sion, Diebold management and tech
nology consultancy, completes the
spectrum with strategic, organiza
tional and informatics consultancy.
From 1993, Computer-Commu
nication-Services will also be active
in major European markets. In order
to gear our activities more closely
still to customer requirements,
sector-specific centres were formed
in the CAP debis Software und
Systeme subdivision to coordinate
our services for major customers and
the various sectors.
The positive trend in earnings of the
Financial Services division was
largely responsible for this; inten
sified competition in the information
technology sector exerted a negative
influence.
Our investment in fixed assets,
largely data processing equipment,
fell during the year under review by
35% to DM 173 million; some of the
hardware was financed by leasing.
The additions to leased equipment,
at DM 5,939 million, were 21%
higher than in 1991. The sharp
increase in financial assets to DM
1,434 million was chiefly due to the
34% holding acquired in the French
company Sogeti S.A.
The debis group employed a to
tal of 8,258 people at the 1992 year-
end, 7,343 of these in Germany and
915 in other countries.
The services industry will con
tinue to grow in 1993 and as a sup
plier of integrated systems solutions,
debis therefore expects that it will
continue to enjoy good opportunities
for developing its business and for a
further growth in total output.
Market Position of the
Systemhaus Division Strengthened
debis Systemhaus increased its
total output from DM 1.2 billion to
DM 1.5 billion. In addition to growth
from within, the inclusion of the
former German Cap Gemini SCS
companies played a role in this.
The contraction in world mar
kets and the worsening economic
climate in Germany had perceptible
consequences for debis Systemhaus
and its subsidiaries, whose growth
slowed particularly from the middle
of the year onwards. Nevertheless,
business with customers outside the
Daimler-Benz group showed a
further increase. The share of total
output accounted for by these cus
tomers grew particularly sharply in
1992 to 41% (1991: 27%). At the
same time, the volume of services
supplied internally within the
Daimler-Benz group also increased.
International Growth
for debis Financial Services
The dynamic development of the
Financial Services division con
tinued in 1992. This was due partic
ularly to sharp growth in Germany,
the US, the United Kingdom, the
Netherlands and Italy. New business
increased by more than 20% to over
160,000 units, with a volume of DM
10.6 billion. Reasons for this gratify
ing growth were the improved and
more extensive range of services
offered by our leasing and financing
companies, changed buying habits,
precisely in the above-mentioned
countries (financing instead of cash
payment) and also the introduction
of new Mercedes-Benz products, par
ticularly the new S-class. The focus
of our financing activities is still the
motor vehicle business. With the
conclusion of some 98,000 contracts
for new passenger cars and 36,000
for new trucks, financing makes an
increasingly large contribution to
supporting the sale of Mercedes-
Benz vehicles. The total number of
contracts outstanding rose accord
ingly to 381,000 units of a value of
DM 18.5 billion (+29%).
Total output, including interest
income from sales financing, in
creased to DM 5.7 billion, a rise of
28%.
Business of our Japanese leasing
and financing company got off to a
successful start in the year under
review.
The newly formed companies
debis Leasing GmbH in Germany
and debis Financial Services Inc. in
the US, which finance products
other than motor vehicles, com
menced operation in the year under
review. In their first financial year,
they have already financed or leased
products to a total value of DM 221
million.
Insurance: National Expansion
and International Presence
The centralization of all the
group's insurance activities in the
Insurance division and the concen
tration of know-how produce
synergy effects which we pass on to
our commercial customers in the
form of intelligent, sound risk
management concepts and to our
private customers through broker
age of individualized insurance
programs.
Trading: Accelerated Growth
The debis Trading division has
taken over the task for the Daimler-
Benz group of concentrating and
coordinating the know-how for barter
trading with countries short on for
eign exchange. In addition to that,
we want to make these markets
more transparent for the Daimler-
Benz group and other companies in
order to develop them, for example,
as alternative procurement sources.
Despite strong fluctuation in the
political sphere, the Trading division
was able to sustain the steady
upward trend of the preceding years
by flexibly responding to current
market requirements. Our supporting
services underpinned export busi
ness totaling DM 546 million to
countries weak in foreign exchange.
Total output rose in the year under
review to DM 436 (1991: 105) mil
lion.
We established our own office in
Further markets were opened up
in the Middle and Far East and in
Central and South America, so that
the number of countries with which
counter-trading is possible was con
siderably enlarged and made a sta
ble basis. In addition, we expanded
in particular the joint venture agreed
to in 1991 between the Russian
natural gas supplier Gasprom and
debis International Trading.
The 50% share acquired in MG
NE-Produkthandel GmbH in the year
under review represents another
milestone in the development of the
debis Trading division. MG NE,
which before we acquired this inter
est was a wholly owned subsidiary
Japan in 1992 from which to look
after the companies of the Daimler-
Benz group operating there.
Owing to the growing impor
tance of risk engineering - the pro
vision of advice concerning control
and reduction of risk through techni
cal analysis - the significance of
debis Risk Consult, a unit of debis
Assekuranz (the Insurance division),
is also growing, debis Risk Consult
provides risk analysis and evalua
tion as well as consultancy in reduc
ing and managing risk in matters of
the environment, fire protection,
product liability, quality assurance
and income loss risk.
With 273 employees we bro
kered a worldwide total premium
volume of over DM 500 million
in the 1992 financial year and
generated total output of some
DM 44 million.
With an expansion of the prod
uct range, we see good growth pros
pects for the Insurance division in
1993.
debitel: Promising Entry into
Mobile Communications Services
In the second half of 1992, the
two operators of the new digital mo
bile communications networks in
Germany, Deutsche Bundespost
Telekom and Mannesmann Mo-
bilfunk, opened their Dl and D 2
networks for trial service. Normal
public service of the D2 network be
gan in December, 1992; of the Dl
network, at the beginning of Janu
ary, 1993. As a private telephone
company, debitel has since then of
fered user-oriented access to these
mobile communications networks
and competent individual profession
al advice to customers. During trial
service we already acquired more
than 10,000 customers. Despite the
delay in the original plans for entry
into service of the mobile communi
cations networks, total output of deb
itel in the year under review
amounted to DM 16 million.
In the 1992 financial year, we
expanded our sales organization and
the existing distribution channels
and integrated important partners
into our marketing network, espe
cially from the mobile communica
tions trade. Since the end of 1992,
our customers can avail themselves
of more than 1,000 debitel sales
outlets throughout Germany. In the
current financial year, we shall
be expanding this service network
further.
of Metallgesellschaft, will increas
ingly allow us the use of its interna
tional service network and barter
trade for the market activities of
debis Trading.
Marketing Services:
A Year of Consolidation
The difficult economic environ
ment in the Federal Republic of
Germany also influenced business of
debis Marketing Services GmbH
(dMS). In spite of this, the total out
put of DM 205 million (1991: DM
214 million) was only slightly below
the level of the previous year, which
was one of strong growth.
Our complete spectrum of
services extends from customer-
specific marketing consulting, media
planning and marketing communi
cation to the organization of trade
fairs and exhibitions, debis Market
ing Services division is thus a
company with a range of services
which far exceeds the usual.
A focal point in the year under
review was the further development
of the Media subdivision, whose task
is the placing of advertisements for
customers in the printed media and
in the electronic media. With the
interest acquired in the Hamburg-
based G.F.M.O. Gesellschaft fur
Media-Optimierung mbH in the
year under review, by the beginning
of 1993 debis Marketing Services
had become one of Germany's six
largest media agencies. This partner
ship will round off the existing range
of services of dMS in the fields of
television and radio, the printed
media and poster advertising.
The Marketing Services division
will purposefully continue to expand
its activities in the four subdivisions.
Qualitative growth will take priority
over purely quantitative growth.
Joint Venture Companies
Heilbronn concerning flexible, auto
mated production of 6-inch wafers
proceeded according to schedule.
Also, the setting up of a worldwide
semiconductor sales organization
was concluded.
In the microsystems and vehicle
equipments fields, the activities of
AEG and DASA were rapidly inte
grated. The market has already
reacted positively to the expanded
capabilities of TEMIC* as is shown
for example by the increased orders
of ABS systems. In Mexico, TEMIC
carried out its first orders for vehicle
subassemblies; in the Czech Repub
lic and Hungary, there was an
overall expansion in production
activities. At the same time, new
customers were acquired, so that the
company now has business relations
with around half of the world's 30
leading vehicle manufacturers.
Mercedes-Benz CharterWay -
A New Concept in Transport
In the 1992 business year,
Daimler-Benz InterServices (debis)
AG and Mercedes-Benz AG estab
lished Mercedes-Benz CharterWay
companies in Germany, Belgium,
France, the United Kingdom and the
Netherlands as joint ventures, each
with a 50% holding, for the purpose
of long-term leasing of commercial
vehicles at prices which remain un
changed over the life of the contract.
The price includes the financing of
the chassis with all superstructures
and attachments, service and repairs
for the complete vehicle, including
the necessary vehicle management,
the provision of substitute vehicles,
plus all vehicle-dependent expenses
such as taxes, insurance, registra
tion and inspection fees.
With Mercedes-Benz Charter-
Way, we are the first leading manu
facturer of commercial vehicles to
avail ourselves systematically of the
opportunities afforded by the
contract hire market.
Traffic Management by Intertraffic
During the year under review,
ITF Intertraffic Gesellschaft fur
integrierte Verkehrsmanage-
mentsysteme was formed, in which
all corporate units of the Daimler-
Benz group hold an interest;
Daimler-Benz Luft- und Raumfahrt
Holding AG has a stake of 50.2%,
Mercedes-Benz 25.2%, AEG 14.6%
and debis 10.0%. The new company,
under the managerial control of
DASA, encompasses the know-how
of the Daimler-Benz group in the
fields of traffic management sys
tems, transport systems and infor
mation technology. Intertraffic's ac
tivities will comprise planning, con
sultancy, design and implementation
of integrated traffic management
systems. These will be offered world
wide for solving problems in the
field of transport by land, water and
air.
The new company also took over
the leading role in the implementa
tion of the traffic management sys
tem "STORM". Interdisciplinary re
search into resolving traffic prob
lems in the Stuttgart conurbation
along with trials of new technology
have been taking place for a number
of years now in the framework of
this pilot project, which was in
itiated by Daimler-Benz AG in con
junction with the Federal state of
Baden-Wlirttemberg and the City of
Stuttgart.
TEMICTELEFUNKEN
microelectronic GmbH founded
On July 1, 1992, AEG and
Deutsche Aerospace combined their
microelectronics and vehicle
equipment activities in TEMIC TELE-
FUNKEN microelectronic GmbH,
which is based in Heilbronn. AEG
and DASA each have a 50% holding
in this company. By combining these
two companies' know-how, TEMIC is
able to offer the entire spectrum of
the microelectronics processing
chain, from semiconductor chips and
microsystems technologies to
complete-system solutions such as
ABS and the airbag. The company
comprises the following areas:
semiconductors, microsystems and
vehicle equipment.
Sales of TEMIC in the first
incomplete financial year totaled
DM 0.7 billion; foreign business
accounted for 50% of this. At the
year-end, the company employed
11,179 people.
In the semiconductors field, it
was possible to compensate only
partially for the weakness of the
entertainment electronics market,
which has been depressed since
1991. The situation was aggravated
by the migration of customers for
these semiconductor products from
Europe to the Far East, as well as by
falling prices, the unfavorable dollar
exchange rate and high domestic
production costs. To safeguard
TEMIC's semiconductor activities in
the long term, more and more pro
duction activities are being trans
ferred to the Far East, especially
the Phillipines.
With its power MOS technology,
which leads the market, the subsid
iary Siliconix Inc., Santa Clara/U.S.A.,
achieved above-average successes;
good business was also recorded by
the affiliates Matra-MHS, Nantes/
France, and Dialog Semiconductor,
Swindon/United Kingdom. The
research activities grouped in
Research and Technology
New Impetus
in Strategy Development
The continuing development of
the central division Research and
Technology was accompanied
throughout the year under review by
a systematic, comprehensive pro
cess of strategy development. This
involved employees from every sec
tor and from all levels of manage
ment. We regard such an intensive
form of internal strategy communi
cation as the expression of a com
pany culture characterised by cre
ativity, ambition, cooperative team
work and an entrepreneurial spirit.
Within this strategy development
scheme,
the long-term orientation of
research activities has been
determined,
a technology strategy was devel
oped for the entire group, and
numerous management-related
processes within the division
have been promoted.
In addition to refining our
methods, we have extended our dia
logue with the four corporate units
of the Daimler-Benz group in order
to analyse and assess their require
ments for new technologies. The
results have been transformed into
recommendations and specific inno
vation schedules.
Improvements
to Drive Technology
The reduction of fuel consump
tion and of noxious emission levels
are the principal objectives being
pursued in the continued improve
ment of drive technology and in the
search for alternative solutions. The
research sector has divided the
topics into five "strategic projects":
I The gasoline engine. Even after
one hundred years of develop
ment, the causes of noxious
emission formation have not yet
been adequately determined. In
addition to analysing the com
bustion process, research is also
providing new approaches,
developing tools for optimisation
and producing improved compo
nents and processes in the form
of prototypes.
i The diesel engine. This drive
system's nitrogen oxide and par
ticulate emission levels are to be
further reduced, with no compro
mise regarding its favorable fuel
consumption.
• The two-stroke engine. The
development potential of various
two-stroke designs is being
demonstrated in the form of
prototypes.
Electric traction. Electrically
powered vehicles can help re
duce levels of noxious emission
and noise on urban roads. To
gether with Mercedes-Benz AG's
Advanced Design sector, re
search is being carried out into
existing maintenance-free bat
teries along with direct-current
and three-phase drive systems
regarding their suitability for
use in an electrically powered
vehicle.
& Hydrogen: As part of the "Hy-
passe" project subsidized by the
Federal Ministry of Research,
investigations are being carried
out into the feasibility of a low-
pollutant local transport system
free of C02.
Vehicle Design:
Methods and Tools
The market-orientated design of
vehicles starts with basic product
ideas, which are followed by a series
of design variants. Computer simula
tion is indispensable here. With
modifications to only a few parame
ters, new variants can be rapidly
produced from model and compo
nent libraries. In order to evaluate
significant product characteristics
such as levels of safety, fuel con
sumption and comfort along with
driving characteristics, ease of oper
ation and costs, the various calcula
tion systems must be integrated and
supplemented by data banks. In fu
ture, the as yet insufficiently devel
oped linkage of individual methods
and process stages will considerably
reduce the time and costs incurred
prior to the definitive choice of design.
The Objectives
of Vehicle Systems Technology
It is only the integration of indi
vidual components as a system
which provides benefits for the cus
tomer. The "Vehicle Systems Tech
nology" research field is therefore
pursuing such aims as the following:
The establishment of systems
concepts for future vehicle
functions,
The retention of integrated
system capability for electronic
functions relevant to competi
tion,
The development of safety
functions for complex systems,
The production of hardware/
software technology for the rapid
conversion of ideas into systems
suitable for vehicular applica
tion.
The Human and the Automobile
High cognitive and emotional de
mands are placed on today's driver.
Safe driving does not simply mean
accident-free driving: it also extends
to the subjective perception of safety
and comfort. The driver's physiologi
cal reactions, his behaviour and per
sonal experience of driving are be
ing investigated by an inter-discipli
nary research team comprising
engineers and behavioral scientists
using state-of-the-art methods and
instruments. The findings can be put
to use in even better adapting tech
nologies to the driver's requirements.
Transport Technology
Development Continuing
on Target
With increasing densities, trans
port must be increasingly organized
as an integrated system. This calls
for an appropriate distribution of re
sponsibilities amongst the different
types of transport, their optimal in
terconnection and an overall trans
port management. To this end, sce
narios for transport in densely popu
lated areas, conducted jointly within
an interdisciplinary work group
involving the corporate units and
Corporate Planning, have been
developed and consequences for the
group derived.
In the European PROMETHEUS
program, Daimler-Benz's Research
sector is concerned with retaining
mobility on European roads while
increasing not only safety and effi
ciency, but also the environmental
compatibility of transport. The cur
rent phase is primarily concerned
with the further development of
promising technologies and the uni
fication of individual systems and
components into an integrated trans
port system. This is being realised in
such projects as STORM (Stuttgart
Transport Operation by Regional
Management) and IFMS (Integrated
Fleet Management Systems).
Interdisciplinary Development
of Materials and
Material Technologies
In addition to exercising a deci
sive influence on the efficiency,
quality and cost of our products,
materials and material technologies
provide the basis of numerous inno
vations. A certain degree of uniform
ity regarding material require
ments throughout the various prod
uct divisions provides considerable
synergy potential, which is being
reinforced through the transfer of
DASA materials laboratories to the
Research and Technology division of
Daimler-Benz AG. The activities are
concentrated on interdisciplinary
technological projects such as the
following:
These research projects are typ
ically concerned with such matters
as the use of ceramics and graphite
in the engine, with new, highly rigid
aluminium alloys, the weaving and
braiding of composite fibre struc
tures and the manufacture of dia
mond layers as heat conductors or -
in the more distant future - as elec
tronic materials.
Automation
and Drive Technology
Decentralised automation
systems are being adapted for the
optimal implementation of complex,
spatially distributed processes. Inter
connected via fibre-optic cables, the
automation apparatus stores the
transmitted processing data in a uni
form manner, so that all automation
equipment can refer to the one data
model. This provides efficient sup
port for project planning, installation
and maintenance.
In the sector of rail-bound vehi
cles, intensified competition is in
creasingly focusing on ride comfort
and wear resistance. Single-wheel
running gears with intelligent drive
and regulating systems promise de
cisive advantages over previous sys
tems incorporating wheels rigidly
connected via a common axle.
Environmentally Compatible
Energy Technology
The research being carried out
into new rational, environmentally
compatible technologies for energy
conversion and storage touches
upon many areas of the group's
activities. At the centre of attention
are electro-chemical processes which
promise particularly high efficiency
factors and low levels of pollutant
emission.
Together with the Anglo Ameri
can Corporation, AEG is developing
the "Zebra" battery for electrically
powered vehicles, on the basis of
sodium/nickel chloride. In order fur
ther to increase the efficiency and
service life of such batteries, re
search is concentrated on improving
the electro-chemical components
and on new design concepts and
materials.
The high-temperature fuel cell is
particularly well suited for independ
ent power supply. The energy from
combustion gases such as hydrogen
or natural gas is converted in the
fuel cells directly into electrical
energy in a highly efficient process.
We have succeeded in producing
very compact flat-cell batteries on a
laboratory scale.
Successful Work
in Components and Microsystems
In the sector of very high fre
quency components and circuits, we
have been continuing concentrated
research into so-called heterostruc-
tures based on the semiconductor
materials gallium arsenide and
silicon. In the course of this work,
we have succeeded in realising the
world's most rapid silicon-based
transistor.
The zero-loss conductance of
electricity in high-temperature
superconductors paves the way for
even more powerful, smaller compo
nents suited for application espe
cially in very high frequency appli
cations. The feasibility of new types
of system solutions is currently be
ing demonstrated, for example in the
form of EHF spectrometers for re
mote sensing satellites. Applications
in energy technology are also being
investigated.
The principal activity of the
"Microsystems Technology" strategic
research field is silicon technology,
in particular micro-mechanics; this
extends to processes for develop
ment, simulation and system design.
A family of acceleration sensors de
veloped in conjunction with Tele-
funken Microelectronic GmbH has
already been introduced in the prod
uct sector, and we have put the first
functioning microlaser prototypes
into operation in the laboratory.
New Software Technologies
The complexity of technical sys
tems is increasing, while develop
ment cycles are becoming shorter.
This calls for high-performance
development tools and innovative
information processing systems.
"Fuzzy logic" and "neuronal net
works" are examples of such pro
jects; on the basis of specific applica
tions they have been investigated,
further developed and incorporated
into the Automation field of activity.
In the area of expert systems,
we have produced a so-called "ex
pert system shell", a development
tool for configuration tasks which
has been tested in four pilot projects
for the preparation of tenders and
for project planning.
Together with AEG Electrocom,
Daimler-Benz's Research division
participated in a competition staged
by the US National Institute of
Standards and Technology for the
automatic reading of handwriting.
Against some forty competitors from
throughout the world, the intelligent
systems from our institutes in Ulm
won two first prizes for upper and
lower case characters and third
prize for numerals.
Research being carried out into
"Interaction between Man and the
Machine" is investigating the oppor
tunities provided by new interaction
and visualisation techniques in such
fields as rail systems and automa
tion. Technological applications such
as speech input or the integration of
mobile communication are being
tested and analysed for an individual
work station and its entire scope of
activities.
The procedures developed by
the Ulm "Software Quality" research
group for the evaluation of already
installed software has proved suc
cessful in practical application at
Mercedes-Benz AG and Cap debis.
We are currently developing
methods of assessing the quality of
software in the early stages of its
development.
Environmental Protection -
Right From Product Development
The shortening of product devel
opment and manufacturing cycles
will be the decisive developments of
the years to come. A significant role
is being assumed by the continuous,
integrated flow of information en
compassing all development and
manufacturing processes relating to
a product. With five pilot projects,
exemplary approaches are being
tested in all corporate units, using
innovative information technologies
and "simultaneous engineering"
concepts.
For the detection of indentations
and other irregularities in the sur
face of bodywork components, new
sensors and algorithms have been
developed which optically recognise
and describe shape faults even at
the pressed part stage, prior to
painting. A further objective of re
search in this area is the integration
of optical measurement data into
CAD systems.
Along with considerations of
economy, production technology
must also address ecological require
ments to an increasing extent. How
ever, methods and instruments pro
viding a holistic evaluation of prod
ucts and their environmental impact
throughout their life cycle are yet to
be developed. The sector "Production
Research and the Environment" is
currently drawing up the necessary
fundamentals.
The Urban Living Environment -
An Interdisciplinary
Research Project
Under the auspices of the "Tech
nology and Society" research group
in Berlin, scientists from various
disciplines are working together in
the research association "The Urban
Living Environment" on the future-
orientated development of expertise
for solving a key problem of all in
dustrial societies, namely the con
flict of aims between quality of life
and the efficient functioning of a
large city. This research association
is sponsored by the Gottlieb Daimler
and Karl-Benz Foundation. We are
uniting the necessary scientific
skills of engineers, administrative
experts, planners and sociologists.
The development and assessment of
the options available is of strategic
significance to the integrated
technology group.
Environmental Protection
environmental regulations, the as
sessment of draft legislation and the
preparation of reports on environ
mental matters.
The Environmental Officers,
whose activities within the group
are conditioned by legal require
ments, ensure compliance with all
environment-related legislation in
addition to monitoring the group's
own environmental guidelines. They
are directly responsible to the plant
managements of the respective
corporate units.
Through the functions of
"Chief Environmental Officer"
and "Environmental Officer", the
Daimler-Benz group is setting
standards far more stringent than
those prescribed by legislation.
Interdisciplinary Projects
With interdisciplinary projects
in the field of environmental protec
tion engineering, the Daimler-Benz
group has devised technologies and
planning concepts which go far
beyond mere compliance with
currently valid legislation.
Projects already initiated include
an exhaust treatment unit for sta
tionary diesel engines, by means of
which particulate and nitrogen oxide
emissions can be reduced to a level
far below the more stringent limits
likely to be introduced in Europe in
the future.
Together with Mercedes-Benz,
AEG and DASA, a schedule has been
drawn up for the development of a
factory free of waste water. This
project is being implemented in the
various construction phases of the
new passenger car manufacturing
plant in Rastatt.
Integrated environmental
protection as a corporate principle
The Daimler-Benz group is com
mitted to integrated environmental
protection, whereby pollution is
addressed at the root of the problem
and all environmental effects of
manufacturing and of the products
themselves are incorporated into the
group's decision-making process.
We have formulated our basic
principles in the form of environ
mental protection guidelines which
are binding for all employees. The
core of this philosophy is summed
up in the statement "Environmental
protection and efficiency are not mu
tually exclusive; they condition each
other." These guidelines are geared
towards maintaining our natural
basis of life and minimizing the
burden on the environment. We are
pursuing a policy of comprehensive,
open information which enables all
employees to play an active role in
our endeavors.
Environmental officers
In order to ensure implementa
tion of our "Environmental Protec
tion Guidelines", Chief Environmen
tal Officers for the group's four cor
porate units and for the executive
holding company were appointed in
1991. They report directly to the
Chief Executive Officers of their
respective corporate units and
co-ordinate their activities within
the corporate "Environment" work
group.
The Chief Environmental
Officers promote environmentally
compatible processes and products,
advise the various corporate units
and motivate all employees towards
integrated environmental protection.
The activities of the corporate "Envi
ronment" work group include the
planning, approval and implementa
tion of measures for the drafting of
To keep air pollution from our
production facilities below critical
levels, we have devised an emission
level network for Mercedes-Benz
AG's Untertiirkheim plant in which
particulate and gaseous emission
readings from 28 different measur
ing points are continuously evalu
ated and documented.
Environmentally
Relevant Information
In addition to technological de
velopments, active environmental
protection calls for comprehensive
documentation of the primary and
auxiliary materials used throughout
the group and of their whereabouts.
To this end, an environmental infor
mation system is currently being
developed which can call up the
relevant data for the plant concerned,
the corporate unit or the entire
group. This information is also of
assistance in the maintenance of an
"environmental balance sheet".
The diversity of activities con
ducted throughout the Daimler-Benz
group provides the basis for highly
efficient material usage; this also
applies to waste materials. Investiga
tions are currently being carried out
as to which production waste mate
rials can be reused at different loca
tions within the group. A corporate
materials exchange is being estab
lished to provide systematic access
to these materials.
It is of utmost importance to us
that each and every employee bears
responsibility for the environment.
Our second Corporate Forum was
therefore staged under the title of
"Environmental Protection". At this
forum, speakers from within and
outside the company discussed the
political and technological conditions
applying to environmental protec
tion. By means of specific programs,
we shall convey these findings to all
employees within the framework of
the continuous training scheme.
Employees
Focal Points of Personnel Policy
Development, implementation
and follow-up of new work and man
agement structures in the individual
corporate units and in the Daimler-
Benz holding company were the
focuses of group personnel policy
in 1992. Restructuring and adjust
ments, establishment of perfor
mance centers, corporate integration
and the further internationalization
of business required the review of
organization and personnel policy.
In a year which was further charac
terized by employment problems as
a consequence of structural changes
in the markets, as well as by grow
ing economic difficulties, the person
nel departments were faced with the
frequently difficult task of striking a
balance between the different expec
tations of the workforce and the
economic exigencies confronting
the company.
Employment Situation
Deteriorates
At the end of the year, the
Daimler-Benz group employed a
workforce of 376,467 (1991:
388,696), including 302,464 (1991:
317,461) employees in Germany.
At Deutsche Aerospace, the
worldwide workforce numbered
81,872 (1991: 83,605) at the end of
1992, including 75,404 (1991:
80,191) people in Germany. Behind
this change are some contradictory
tendencies. A rise in personnel
resulted from the pro rata inclusion
of Eurocopter S.A. and TEMIC, and
from full consolidation of Deutsche
Aerospace Airbus GmbH. On the
other hand, the changed interna
tional security situation and the
shrinking budgets of government
agencies had the consequence that
Deutsche Aerospace capacity utiliza
tion in the year under review was on
the whole unsatisfactory. In all divi
sions of the company, manpower
was adjusted by making use of natu
ral attrition and early retirement
plans. Moreover, in the second half
of 1992 short-time work became
necessary.
Daimler-Benz InterServices
(debis) had a total of 8,258 (1991:
6,203) employees at the end of
1992. The primary reason for the
larger workforce was the inclusion
of CAP Gemini in the group.
Daimler-Benz AG (holding com
pany) had a total of 3,071 employees
at year-end, of whom some 555 held
group management functions, 1,287
were involved in group research
activities, and 1,229 worked in
services for the various corporate
units and for the Mohringen location.
In the new Federal German
states, at the end of the year 1992
some 10,300 persons were
employed by companies of the
Daimler-Benz group.
In Germany, the employment
situation in the individual corporate
units was on the whole unsatisfac
tory. Particularly due to declining
economic activity in the second half
of 1992, the situation in Germany
took a substantial turn for the worse.
By contrast, outside Germany the
employment situation in the
Daimler-Benz group was largely
stable.
Mercedes-Benz had an overall
workforce of 222,482 at the end of
1992, including 170,137 (1991:
185,154) employees in Germany. At
52,345, employment at the foreign
production and sales companies was
on the previous year's level. Scaled-
down production schedules necessi
tated a reduction of the workforce in
all German plants with the exception
of Rastatt. This was achieved by na
tural attrition and non-renewal of lim
ited employment contracts. Excess
staff then remaining was trimmed
by increased granting of leave, non-
work shifts, and early retirement.
Short-time work is planned for the
first half of 1993 in all German car
and commercial vehicle factories.
At AEG, the employment situa
tion in 1992 was satisfactory on the
whole, although activity in the latter
half of the year in some areas of the
Automation field of activity, in Com
ponents and in Microelectronics was
affected, in some cases sharply, by
the economic slowdown. At the end
of 1992, the AEG group had a world
workforce of 60,784(1991: 58,642),
including 46,559 (1991:43,975)
employees in Germany. The number
of employees in Germany increased,
above all due to inclusion of the
units acquired in the new Federal
states. The inclusion of TEMIC TELE-
FUNKEN microelectronic GmbH
only on a pro rata basis caused a re
duction in the number of employees
- particularly outside Germany.
New Work and Management
Structures in the Group
In all corporate units and in the
Daimler-Benz holding company
greater efforts are being undertaken
to meet future requirements in inter
national competition through mod
ern, integrated forms of work organi
zation. Shorter communication chan
nels and speedier decision-making
processes will raise efficiency.
Mercedes-Benz is facing up to
the challenges of competition with
all-around further development of its
organizational structures. The
planned reorganization into product
and service centers has the purpose
of gearing organization in all areas
of the enterprise more strongly to
the needs of the market and the cus
tomers. The heart of this new man
agement structure is a large-scale
decentralization of responsibility
and decision-making power. This not
only strengthens personal respon
sibility, but in logical consequence
also reduces the number of hier
archical levels.
Introduction of group work in
the plants and performance centers
of the company is designed to im
prove the basis for employees to be
come more actively involved in and
to assume greater responsibility for
company operations and to make
work more interesting and more
efficient.
1991 having been a year in
which fundamental decisions were
made concerning the future strategic
orientation of the AEG group, in the
year under review further steps
were initiated to change the man
agement structure and improve the
cost structure. The operative units
will take independent responsibility
for their business in future. The
group's headquarters will concen
trate on managerial planning and
control as a steering unit, with about
200 employees. Tasks formerly per
formed by head office will be trans
ferred to the fields of activity or con
centrated in service units. This will
be supplemented by development of
a management concept for the AEG
group which includes organization
in the operative units.
The previous Deutsche Aero
space was merged with the MBB and
TST companies in the year under
review. The administrative depart
ments of the various headquarters
were streamlined by combining the
previous staff functions of the
divisions Aircraft, Space Systems,
Defense and Civil Systems as well as
Propulsion Systems with those of the
new DASA. These measures are
intended to improve the capacity for
action and cooperation and to in
crease transparency and efficiency.
In the Daimler-Benz holding
company a new management struc
ture was approved which will be put
into practice beginning in 1993. Its
essential elements are short commu
nication channels, fewer manage
ment levels, and appreciably en
larged spans of control for top-level
executives.
Collective Bargaining
Agreements for 1992
In the old Federal German
states, the accords for the metal-
working and electrical industries
brought an increase in wages and
salaries of 5.4% effective April 1,
1992, and a further 3% increase
effective April 1, 1993. The contract
runs for 21 months, ending on
December 31, 1993. In addition, an
increase in contractually guaranteed
special remuneration to 55% of
monthly pay for 1992, and to 60% as
of 1993, was agreed. This special
remuneration can be set off against
equivalent voluntary company pay
ments. As agreed in a phased plan,
in the new German states the stand
ard wages and salaries were raised
to 70% of the amounts which were
paid in 1991 in the metal-working
and electrical industries of the old
Federal German states.
Personnel and
Social Welfare Expenditure
Group personnel expenditure
rose by 9% to DM 32 billion. In
Germany, the increase was due pri
marily to rises in standard wages
and salaries and a renewed rise in
social welfare contributions.
A central element of the social
benefits provided by the Daimler-
Benz group are the company pen
sions. In 1992 it was decided to
increase the pension tables for
employees of Daimler-Benz AG and
Mercedes-Benz AG by 6% with effect
from January 1, 1993. Daimler-Benz
AG and Mercedes-Benz AG paid a
total of DM 318 million to some
49,400 pensioners, widows and chil
dren in the year under review. A to
tal of DM 623 million was allocated
to pension provisions at Daimler-
Benz AG and Mercedes-Benz AG.
These expenses are calculated -
bringing them into line with the
practice used in the Daimler-Benz
consolidated statements since 1989
- on the basis of the fiscal stipula
tions of Section 6a of the Income Tax
Law, that is to say using a notional
interest rate of 6% instead of the pre
vious 3.5%. AEG disbursed DM 107
million and DASA DM 96 million to
recipients in the year under review.
A total of DM 1.5 billion was allo
cated in the group to company
pension schemes.
Private Capital Formation
Assistance in forming private
capital was also provided in 1992.
Employees of the domestic plants
had the opportunity to purchase
shares of Daimler-Benz AG and Mer
cedes Aktiengesellschaft Holding at
a preferential price. In all, about
120,500 employees took advantage
of this offer, subscribing to some
146,000 Daimler-Benz shares and
15,200 MAH shares.
Managerial Development
and Planning
A difficult business environment
creates new situations for manage
ment. Demands grow on managers
to deal with complex, fast-changing
tasks. The available human re
sources in the company must be op
timally utilized through systematic
personnel development. Serving this
purpose are also the uniform guide
lines for filling senior-level manage
ment positions, which have been
adopted in all corporate units, and
which aim, amongst other things,
at greater internationalization of
management.
A particular concern in the year
under review was the integration of
newly added companies in manag
erial development and planning
programs.
Company Training Activities
At the end of 1992, 13,314
young people were undergoing voca
tional training within the domestic
group. 3,850 young men and women
commenced training in the year
under review. Of the 3,835 who suc
cessfully completed their courses,
82% were given jobs within the
group. Training is offered in almost
60 technical trades and 10 business
professions in all. This training is
supplemented by 15 special pro
grams for school leavers, above all at
the professional academy. As in the
years before, these programs enjoy
rising popularity.
Advanced training has great sig
nificance in the Daimler-Benz group,
also in times of economic troubles.
All the corporate units offer a com
prehensive program consistent with
the individual areas of activity. The
senior managerial staff training
scheme was further extended in
1992. Expenditure for basic voca
tional training and advanced train
ing came to some DM 834 million in
the year under review.
Preventive Health Care
and Occupational Safety
Medical care for our employees
is traditionally an essential facet of
our personnel and social policies.
The medical services of the various
corporate units employ a staff of
250, including 50 doctors.
Throughout the group in Ger
many, 200 full-time safety experts
were responsible for on-the-job
safety. The success of their work is
reflected in the further reduction in
the number of accidents in all corpo
rate units.
Thanks to Our Workforce
We would like to express our
gratitude to all our employees for
their commitment and hard work in
a year in which reorganization of the
group was continued and which was
also characterized by special chal
lenges and in some cases greatly
changed market conditions. We also
appreciate the trust and cooperation
demonstrated by the representatives
on the various labor councils and
committees at all levels of our group.
Finance
Group Valuation Methods
Standardized Extensively
With the changes in valuation
methods made in 1989, Daimler-
Benz adapted its accounting policies
more closely to internally accepted
accounting policies because capital
markets only rely on financial state
ments thus prepared. The valuation
methods traditionally applied in the
automobile business has been con
tinued in the individual accounts of
both Daimler-Benz AG and
Mercedes-Benz.
In 1992, we have adapted the
valuation methods for pension provi
sions and for inventories to the prac
tices used in the consolidated ac
counts. We are thus applying the
same accounting principles and val
uation methods at the different
levels and within each area of the
Daimler-Benz group. This will in
crease comparability of the individ
ual corporate sectors among them
selves and of other companies with
the Daimler-Benz group as a whole.
At the same time, we thus improve
our information by segments, which
is an important part of U.S. publica
tion requirements.
Net Income Declined
to DM 1.45 Billion
The financial statements were
impacted, sometimes substantially,
by changes in the circle of consoli
dated companies. While some com
panies of the AEG group were re
moved, Deutsche Aerospace Airbus
GmbH - on account of the uniform
control existing now - was fully
consolidated for the first time.
As in prior years, we have re
duced the interest income earned in
the high-inflation countries by the
inflation portion.
The results of operations from
ordinary business activities dropped
by 37 % to DM 2.5 billion. Operating
results (results from ordinary busi
ness activities less financial results
less other taxes), declined to an even
greater extent, namely by 59% to
DM 1.0 billion. Of decisive influence
here was the unexpected deteriora
tion of the automobile business be
ginning in the third quarter, the
changing climate for important sec
tors of the aero- and space travel in
dustry and the burdens resulting
from the devaluation of several Euro
pean currencies. Net income fell dis-
proportionally by 25 % to DM 1.45
billion, while income taxes, on ac
count of substantial losses incurred
by consolidated companies, notice
ably declined also.
Balance Sheet Picture of the
Group Characterized by Financial
Services Business
The consolidated balance sheet
is more influenced by the strongly
expanding leasing and financing
business than is apparent in the
statement of income. Our leasing
contracts are ordinarily designed in
such a way that the assets are
shown in the books of the lessor;
leased items are valued at acquisi
tion or manufacturing costs reduced
by scheduled depreciation al
lowances. They are shown sep
arately under fixed assets. Deferred
taxes resulting from the elimination
of intercompany profits are shown
on the asset side of the balance
sheet under deferred taxes.
The sales financing business is a
pure credit business; it increases
both sides of the balance sheet
Sales revenues in 1992 rose 4 %
to DM 98.5 million; on a comparable
basis, the increase amounted to 2 %.
The positive trend in the domestic
marketplace during the first six
months was nearly compensated for
in all markets during the following
period because of the difficult eco
nomic situation. With DM 101 bil
lion, total output exceeded the DM
100 billion mark. Since the cost of
materials remained nearly un
changed, its share in terms of total
output declined to 48.7 % (1991:
50.2 %). In contrast, the ratio of per
sonnel expenses noticeably rose to
31.7 % (1991: 29.8 %) as a result of
the first-time inclusion of companies
with labor-intensive manufacturing.
Union-negotiated wage and salary
increases effective April 1, 1992,
further increased expenses; offset
ting this were generally lower an
nual average employment figures.
Depreciation allowances climbed
18 % to DM 7.2 billion on account of
higher investments in fixed assets
and in leased equipment.
Net interest expense of our leas
ing and sales financing companies
remained nearly unchanged at DM
0.4 billion, just slightly below the
previous year's level. The offset
amount to the interest expenses that
are necessary for the financing of
the leasing business are the reve
nues which are included in the leas
ing rates and thus in total sales. Ex
cluding the interest expense from the
leasing and sales financing, consoli
dated interest income amounted to
DM 1.0 billion (1991: DM 1.1 billion).
because receivables from customers
and liabilities from refinancing are
simultaneously shown. Moreover,
deferred leasing income and special
lease payments are shown under
deferred credits on the liability side
of the balance sheet.
Within the Daimler-Benz group
we use the financial services
business as a flexible tool to support
our global sales strategy. The effect
that the financial services business
has on the consolidated balance
sheet is illustrated by the table
below. Here it was assumed that the
funds bound by the financial sevices
business are available for the un
scheduled repayment of liabilities.
The changes in stockholders' equity
result, in particular, from consolida
tion methods.
Group Balance-Sheet Total
Noticeably Increased
The group's balance sheet total
(assets/stockholders' equity and lia
bilities) rose 14 % to DM 86.2 billion
on account of the larger business
volume and the first-time inclusion
in consolidation of Deutsche Aero
space Airbus GmbH. Long-term as
sets, including leased vehicles and
equipment, climbed by 15 % to DM
33.6 billion. Fixed asset additions of
DM 7.8 billion were offset by depre
ciation allowances of DM 4.7 billion
and disposals of DM 0.4 billion. Also
in 1992, leased vehicles and equip
ment increased disproportionately
by 21 %; their share in terms of total
assets rose to 11.3 %. Excluding
leased vehicles and equipment, the
ratio of fixed assets to total assets
remained nearly unchanged at
27.7 %. Receivables from sales
financing activities climbed 45 % to
DM 6.2 billion. Inventories,
which strongly increased over the
Expense Structure in Terms
of Total Output
Daimler-Benz Group
DM 100.9 Billion (1991: DM 98.6 Billion)
previous year, were financed to the
tune of 25 % through advance
payments received from customers.
Liquidity declined to 11.4 % (19 91:
13.9%) of total assets.
On the liability side of the bal
ance sheet, shareholders' equity -
excluding the amount set aside for
dividend payments (unappropriated
profit) - rose by DM 0.3 billion to
DM 19.1 billion. Because of the no
ticeably higher business volume, the
ratio of net equity to total capitaliza
tion fell to 22.2 % (1991: 24.9 %). Ex
cluding the financial services com
panies, the net equity ratio in terms
of total capitalization amounted to
27,9 % (1991: 29.9 %). The coverage
of long-term assets (excluding
leased vehicles and equipment) fell
to 81 % (1991: 89%).
The liabilities attributable to our
financial services companies
amounted to DM 11.0 billion (1991:
DM 8.1 billion). Their change ac
counted for about 75 % of the in
crease in total liabilities. Also, provi
sions increased far above average,
i.e. by 24 % to DM 34.7 billion; the
main cause for this was the change
in the circle of companies included
in consolidation; provisions ac
counted for 40.3 % (1991: 37 %) of
total capitalization. Long-term assets
(excluding leased vehicles and
equipment) and net inventories are
fully covered by net equity and long-
and medium-term provisions.
Statement of Cash Flow
In the course of a further inter
nationalization of our account pre
sentation, our statement of cash flow
has been closely geared to the U.S.
Financial Accounting Standard
(SFAS) No. 95.
The basic difference between
SFAS 95 and the method heretofore
applied consists in the unequivocal
attribution of the payment streams
to the three segments (business
activities, investment activities and
financing activities). In contrast,
our presentation hitherto has only
shown sources of funds and applica
tion funds separately. Besides this
the cash flow figure currently shown
from business activities is purely a
financial indicator.
In comparision to the previous
year this figure decreased by 25% to
DM 5.9 billion. This resulted from a
decline in operating liabilities of
DM 1.6 billion against an increase of
DM 1.7 billion in 1991. The cash
flow from investment activities was
also below that of the previous year
at DM 9.0 billion; this was affected
mainly by the first-time consolida
tion of Deutsche Aerospace Airbus
GmbH. As the internally generated
liquidity did not suffice to finance
various investments and we took on
less debt as in 1991, our liquidity
declined to DM 9.8 billion (1991:
DM 10.6 billion). Also in the years to
come we expect investments of the
Daimler-Benz Group to be at a high
level. The leasing and sales financ
ing business in particular require
the injection of additional capital.
Depending on favorable stock mar
ket condition we intend to secure for
corporate growth also through tak
ing on new equity.
approval practices for credit insur
ance. In contrast, the financing
opportunities available in Latin
America have improved depending
on the economic improvement of
some countries.
The newly-developing and
developed countries of Africa, Asia
and Latin America are only able to
finance capital investments if funds
from subsidized programs of public
institutions are available. This is
particularly true for East European
countries and CIS. With respect to
future project financing, systems for
aid and rehabilitation programs are
already in place. Making use of such
systems will become of considerable
importance in financing our
products.
In the solution of these tasks,
the company will, also in the future,
minimize financing risk inherent in
sales activities. The company will, at
the same time, keep open its financ
ing options.
In 1992, our business policy at
home and abroad again conformed
with the "OECD-Guidelines for Multi
national Companies". Our intercom
pany pricing policy is based on the
"dealing-at-arms-length" principle.
Activities of the Group Treasury
During the year under review,
we have continued to further de
velop, both objectively and instru-
mentally, our "cash-management" in
connection with the inclusion of
Deutsche Aerospace Airbus GmbH
and the establishment of a foreign-
currency based domestic "cash-
pooling". We were able to increase
the flexibility and efficiency of our
treasury activities through more in
tensive use of the commercial-paper-
programs, particularly in Germany
and the U.S.A.
Through active portfolio manage
ment we have again invested long-
term funds - depending on interest
rate and interest income expecta
tions - primarily in fixed-interest
instruments of first-class issuers.
Investments in stocks represent a
small portion of our portfolio.
The continued growth of our
leasing and sales financing business
has further increased the demands
placed on our centrally managed
refinancing tasks.
In order to enlarge our investor
basis, we floated a Euro-Medium-
Term-Note-Program in 1992, with a
volume objective of two billion U.S.
dollars. This instrument, which can
be used by Daimler-Benz Interna
tional Finance B.V., Daimler-Benz of
North America and Daimler-Benz
United Kingdom pic - companies al
ready well known and active in the
Euromarket - allows us to use the
capital markets to the fullest extent.
As in prior years, the task of the
foreign exchange management con
sisted in limiting the currency risks
of the operating sectors, particularly
with regard to the USD, JPY, GBP,
CHF and ESP, through suitable for
eign exchange hedging measures.
Also in the future, we will be guided
by continually updated currency rate
expectations and then employ the
financial instruments individually
depending on the currency and
business field.
Within the scope of the above-
mentioned treasury activities, we
also avail ourselves of derivative
capital market instruments. They
serve the purpose of limiting the
group's financial risks overall and of
optimizing results of operations.
Sales and Project Financing
The worldwide sales of our prod
ucts is increasingly supported by
standardized financing programs
and individually-tailored financing
solutions.
It is becoming more and more
necessary to find new solutions for
our companies that carry on busi
ness in the infrastructure sector. In
this area, private financing models
must increasingly be offered. In or
der for the private sector to be able
to take over these tasks, the public
sector in the buyer country must ful
fill certain yield and risk standards.
Moreover, the burden of risk must
not - as is frequently requested by
public contractors - be limited to the
producer of capital equipment.
In the traditional export financ
ing field, we have again in 1992
fully utilized all opportunities of ex
isting financing and hedging instru
ments. The sometimes dramatic de
terioration of economic conditions in
some African countries and in east
ern Europe resulted in restrictive
Key Figures of Major Subsidiaries
of Daimler-Benz AG
The Daimler-Benz Share
Statistics per Common Share
Stock Exchange Development
After an overall satisfactory
development during the first six
months, German stock exchanges
suffered a severe backlash following
the surprise increase in the discount
rate. Particularly the stocks of auto
mobile manufacturers, favored up to
that point, often had to accept heavy
losses. The Daimler-Benz share
dropped from a yearly high of DM
815.50 at the beginning of June to
DM588.50.
During the following period,
profit expectations for most German
companies had to be noticeably low
ered as domestic business activities
weakened dramatically and the
D-mark's value rose within the Euro
pean currency system. The German
stock index (DAX) reached a yearly
low of 1,420 points in October.
While the DAX index rose 9 % by the
end of the year, the Daimler-Benz
share dropped further to DM 538.50.
Investor Relations-Activities
With our investor relations activ
ities, both at home and abroad, we
are trying to respond to the increas
ing interest in the Daimler-Benz
technology group. We not only talk
to financial analysts and institu
tional investors, but also quite con
sciously to individual investors. We
regularly inform all our shareholders
by means of the annual shareholders
meeting, the annual report and peri
odical interim reports. In Stuttgart,
in May of 1992, we informed the
members of the German Financial
Analysts Society (DVFA) about our
actual economic situation. Further
more, we gave presentations in
Zurich, Vienna, Paris, Milan, Boston,
New York, Tokyo, London and
Edinburgh.
Second International
Stockholders' Fair in Dusseldorf
The second international stock
holders' fair (IAM) took place in
Dusseldorf from August 27, to Au
gust 30. More than 13,000 visitors
informed themselves in the booths
of 105 exhibitors, and in roughly
150 presentations about all aspects
of investments in stocks.
We have made use of the IAM to
show what the Daimler-Benz share
stands for. We met with a good re
sponse both during our daily special
events and our "contest", in which
more than 10,000 visitors partici
pated.
By the end of February 1993,
the price of the Daimler-Benz stock
jumped 11 %, while the DAX index
only increased 9 %.
Again in 1992, our stock be
longed to the most frequently traded
shares on German stock exchanges;
a total of 228 million shares were
traded, amounting to DM 153.5 bil
lion. This amount represented 11 %
of all domestically traded stocks.
On the German futures exchanges,
Daimler-Benz options again be
longed to the most actively traded
issues.
Market Price of the Daimler-Benz
Share
Trade on Foreign Stock
Exchanges
Other than the German stock
exchanges, the Daimler-Benz stock
is traded on seven foreign stock ex
changes (Basel, Geneva, Zurich, Lon
don, Paris, Tokyo and Vienna): With
the listing on these exchanges, we
also show in financial markets the
international orientation of our com
pany. Long-term, moreover, we wish
to be less dependent on the develop
ment of a single capital market.
Trading in London in 1992 was
particularly active. Total turnover
amounted to 16.5 million Daimler-
Benz shares.
At the beginning of the year we
continued talks with the Securities
and Exchange Commission (SEC)
with the aim of introducing our
shares to the New York Stock
Exchange. The results to date have
made us very confident that
Daimler-Benz shares can already be
traded in the course of this year on
the worlds' most important stock
exchange.
Investment in Daimler-Benz Shares; Investment Amount DM 10,000
Dividend"
DM
Dividend unchanged
at DM 13
Daimler-Benz Shares Are a Good
Long-Term Investment
For the business year 1992, a
dividend of DM 13 for each eligible
share of DM 50 per value, will be
proposed to the annual general
meeting taking place on May 26,
1993. For shareholders subject to in
come taxes in Germany, the gross
dividend thus amounts to DM 20.31.
Total dividend payout of DM 604
million (1991: DM 603 million) is
slightly higher because of lower
inventories in treasury stock.
The net income of Daimler-Benz
increased solely on account of the
revaluation recorded on the books in
1992. Even though the income por
tion derived from ordinary business
activities is noticeably lower in
comparison to the previous year, we
have maintained the dividend rate.
Continuity in serving our stock
holder will remain our long-term
policy.
The past year has shown that an
investment in stocks offers both op
portunity and risk. A six-year invest
ment and a three-year investment
both show negative results, due to
the high prices at the time of pur
chase and the share price decline
during last year. Investments made
in currencies other than the D-mark
increase the risk further. Longer
term, however, stocks offer returns
that cannot be achieved with fixedin-
come securities. A twelve-year
investment in Daimler-Benz shares,
as is typical for our shareholders,
shows a positive return of 12.8 %.
In this calculation we have as
sumed that the proceeds from rights
issues and cash dividends (excl. tax
credit) were reinvested in Daimler-
Benz stocks and that no additional
payments were made by share
holders.
Total Divident Amount
In Millions of DM
Share Price Development
Allowing for the 1989 Increase in Capital
Financial Statements
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Non-Current Assets
Notes to the Consolidated Financial Statements
Principles and Methods
The consolidated financial state
ments have been prepared in accord
ance with regulations set forth in the
Commercial Code; the amounts are
shown in millions of D-marks. The
items, which are summarized in the
balance sheet and the statement of
income, are separately shown in the
notes and, where necessary,
explained.
Deviating from the previous
year, we additionally show in the
consolidated financial statements -
apart from the caption "leased vehi
cles and equipment" - the captions
"receivables from sales financing"
and "liabilities from leasing and
sales financing", in order to accomo
date the pecularities of the financial
services business.
Accounting Principles and
Valuation Methods
During the year under review,
we have continued to apply the
same accounting principles and val
uation methods. Assets and lia
bilities presented in the consolidated
balance sheet - in identical group
circumstances - are uniformly val
ued. In 1992, as in previous years,
provisions for approved conversion,
reconstruction and maintenance pro
jects have been set up, or have been
systematically updated.
Intangible assets are valued at
acquisition costs and are written off
over the respective useful lives.
Goodwill resulting from the capital
consolidation, if derived from the ex
tension of the group, is in principle
amortized over five years; goodwill
relating to the restructuring of the
group is charged to retained earn
ings. Goodwill which arose from the
creation of strategic alliances,
is split. The portion relating to
the group's expansion is written off
over the relevant useful life, the one
relating to the restructuring is
charged to retained earnings.
Fixed assets are valued at acqui
sition or manufacturing costs. The
self-constructed facilities comprise
direct costs and applicable materials
and manufacturing overheads, in
cluding depreciation allowances.
Investments in related com
panies, and in other long-term finan
cial assets are valued at the lower of
cost or market; non-interest bearing
or low-interest bearing receivables
are shown at their present value.
Major investments in associated com
panies are valued according to the
book value method at equity.
The acquisition/manufacturing
Leased equipment is valued at ac
costs for fixed assets are reduced by
scheduled depreciation charges. The
opportunities for special tax-
deductible depreciation allowances
were fully utilized, i.e. in connection
with Section 7d of the Income Tax
Act (environmental protection in
vestment), Section 6 b of the Income
Tax Act, Section 4 of the Regional
Development Law and Subsection 35
of the Income Tax Guidelines.
Scheduled fixed asset deprecia
tion allowances are calculated gener
ally using the following useful lives:
17 to 50 years for buildings, 8 to 20
years for site improvements, 3 to 20
years for technical facilities and ma
chinery, and 2 to 10 years for other
facilities and factory and office
equipment. Facilities used for multi-
shift operations are depreciated
using correspondingly lower useful
lives. Buildings are depreciated
using straight-line depreciation rates
- and where allowable under the
Tax Codes - declining rates. Mov
able property with a useful life of
four years or more is depreciated
using the declining-balance method.
For movable property, we change
from the declining-balance method
to the straight-line method of calcu
lating depreciation allowances when
the equal distribution of the remain
ing net book value over the remain
ing useful life leads to higher depre
ciation amounts. Depreciation
allowances on additions during the
first and second half of the year are
calculated using the full year or half-
year rates, respectively. Low-value
items are expensed in the year of
acquisition.
quisition or manufacturing costs,
and is depreciated using the
declining-balance method. We
change from the declining-balance
method to the straight-line method
of calculating depreciation al
lowances when the equal distribu
tion of the remaining net book value
over the remaining useful life leads
to higher depreciation amounts.
The opportunities for tax-deductible
depreciation allowances were fully
utilized, i.e. in connection with
Subsection 35 of the Income Tax
Guidelines.
Raw materials and supplies as
well as goods purchased for resale
are valued at the lower of cost or
market. Finished goods are valued at
manufacturing costs which com
prise, apart from direct material and
direct labor, applicable material and
manufacturing overheads including
depreciation charges.
To the extent that inventory
risks are determinable, i.e. for
reduced usability after prolonged
storage or after design changes, rea
sonable deductions are made, which
are calculated based on a loss-free
valuation.
Receivables and other assets - if
non-interest bearing - are reduced
to their present vaue at the balance
sheet date, and are valued taking
into account all known risks. A
lump-sum allowance for doubtful
accounts on a country-specific scale
is deducted from the receivables in
recognition of the general risk inher
ent in receivables.
Principles of Consolidation
Capital consolidation was ef
fected according to the book value
method where the parent's acquisi
tion costs are eliminated against the
relevant share capital and retained
earnings at the time of acquisition or
first-time inclusion in consolidation.
This applies analogously to the joint
venture companies that were in
cluded pro rata.
The differences resulting from
the capital consolidation (debit
balance) are, as far as possible, allo
cated to the relevant balance sheet
items and are written off to income
over their useful lives. For the treat
ment of the remaining differences
(goodwill), see explanations under
"accounting principles and valuation
methods". The remaining goodwill
resulting from the addition of the
joint venture companies of the Euro-
copter group is shown under "intan
gible assets"; the portion applicable
to the group's expansion will be
amortized over a useful life of 10
years. The other portion was
charged to retained earnings in
1992, without affecting income.
Treasury stock is valued at the
expected selling price to employees
of the Daimler-Benz group. Securities
are valued at the lower of cost or
market value at the balance sheet
date.
Provisions for old-age pensions
and similar obligations are actu
arially determined on the basis of an
assumed interest rate of 6 % using
the Entry Age Actuarial Cost
Method. The regulations of the 1992
Pension Reform Act have been taken
into account in calculating the provi
sion amount.
Provisions for taxes and other pro
visions are determined on the basis
of fair and reasonable business judge
ments. The obligations in the per
sonnel and social area are reflected
in the financial statements at non-
discounted values expected to be
paid in the future as benefits are
vested.
Liabilities are shown at their
repayment amounts.
Companies Included in
Consolidation
The companies included in con
solidation encompass, apart from
Daimler-Benz AG, 271 (1991: 255)
domestic and foreign subsidiaries
and 7 joint venture companies.
During the year under review,
26 companies have, for the first
time, been added to consolidation.
Moreover, one joint venture com
pany was included pro rata, for the
first time, pursuant to Section 310 of
the Commercial Code. A total of 10
subsidiaries and one joint venture
company were deleted from consol
idation.
Deutsche Aerospace Airbus
GmbH and its subsidiaries were
fully consolidated in the consoli
dated accounts effective January 1,
1992. Up to 1991, Deutsche Aero
space Airbus GmbH was only con
solidated at equity in conformity
with Section 296, Subsection 1,
Paragraph 1 of the Commercial
Code. After the transfer by the
Kreditanstalt fur Wiederaufbau of its
20 % stake in Deutsche Aerospace
Airbus GmbH to DASA, this limita
tion with respect to excercising its
rights no longer applies, which, on
account of agreements with the
Federal Republic of Germany and of
rules in the bylaws, had existed up
to that point.
The first-time consolidation of
the Deutsche Aerospace Airbus
group effected both the consolidated
balance sheet and the consolidated
statement of income. These effects
are explained under the relevant bal
ance sheet and statement of income
captions.
In 1991, only the balance sheet
items of the Eurocopter companies
were proportionally included in con
solidation because of their relatively
short affiliation with the group; in
1992, they were included in the
statement of income as well.
Because income and expense
items relative to the German heli
copter activities were still included
in the 1991 accounts, comparability
of group financial statements with
the previous year is not materially
affected.
Not included are 248 subsid
iaries, whose effect on the assets,
liabilities, financial position and re
sults of operations of the group is
not material (their total sales volume
is less than 1 % of consolidated
sales), and 11 companies adminis
tering pension funds whose assets
are subject to restrictions.
Intercompany receivables and
payables have been eliminated; the
differences resulting from debt
consolidation have been charged or
credited to income.
A ll material intercompany profits
resulting from the intercompany
sales of goods and services have
been eliminated, except items of
minor importance. This also applies
to sales of goods and services by
associated companies to companies
included in consolidation.
Intercompany sales and other
intercompany earnings have been
eliminated against the relevant
costs, or reclassified to "capitalized
in-house output" or to "increase in
inventories", respectively.
Deferred taxes (debit balance)
shown in the consolidated balance
sheet result from income-affecting
consolidation adjustments.
Curreny Translation
Foreign currency receivables are
translated in the individual financial
statements at the bid price on the
day they are recorded or at the spot
rate on the balance sheet date if
lower. Foreign currency payables
are translated at the asked price on
the day they are recorded or at the
spot rate on the balance sheet date if
higher.
The accounts of all foreign com
panies are translated to D-marks on
the basis of historical exchange
rates for non-current assets, and at
year-end exchange rates for current
assets, borrowed capital, and unap
propriated profit. Stockholders' eq
uity in D-marks is the remaining dif
ference between translated assets
less translated liabilities and unap
propriated profit. The difference
resulting from the translation of
balance sheet items is recorded
in consolidated retained earnings.
Expense and income items are
essentially translated at average an
nual exchange rates. To the extent
that they relate to fixed assets (fixed
asset depreciation, profit or loss
from disposal of fixed assets), they
are translated at historical costs. Net
income, additions to retained earn
ings, and the unappropriated profit
are translated at year-end rates. The
difference resulting from the transla
tion of annual net income, between
annual average rates and the
exchange rates at the balance sheet
date, is reflected in other operating
income (1991: other operating ex
penses).
The adjustments made in the in
come statements by our subsidiaries
in Brazil for monetary devaluations
have been retained in the consoli
dated statement of income without
change, effectively preventing reflec
tion of inflationary profits. The
income taxes, which were already
geared to the balance sheet date in
the national financial statements,
have been translated at year-end
rates.
Items from inflation-adjusted in
come statements of our Argentinian
companies are translated at year-end
exchange rates. Fictitious profits/
losses resulting from the divergence
between the inflationary trend and
the changes in the currency's value
have been eliminated.
A difference (credit balance)
resulting from the capital consolida
tion is shown under the balance
sheet caption "other provisions" ear
marked as "difference from capital
consolidation with reserve charac
teristics".
Profits earned by subsidiaries
after the date of acquisition are
added to consolidated retained earn
ings. The unappropriated profit
shown in the financial statements
corresponds to the dividend payout
proposed by Daimler-Benz AG. For
this reason we have charged the
income-affecting consolidation
adjustments and the profits earned
by our subsidiaries to consolidated
retained earnings.
The consolidated financial state
ments include 127 associated com
panies.
At year-end, 13 associated com
panies have been included in our
consolidated financial statements ac
cording to the book value method at
equity.
The remaining associated com
panies are shown under investments
in affiliated companies at acquisition
costs - in some instances less write
downs - as they are not material to
the consolidated assets, liabilities, fi
nancial position and results of opera
tions.
The 34 % stake in Sogeti S. A.,
Grenoble, which was acquired by
Daimler-Benz AG in December of
1991, was transferred to debis AG in
October 1992. As of December 31,
1992, Sogeti was included in consol
idation at equity according to the
book value method. However, only
the 1991 accounts were used be
cause Sogeti's 1992 financials had
not been available at the time the
Daimler-Benz consolidated financial
statements were prepared. The good
will of DM 355 million will be amor
tized over 15 years.
Notes to the Consolidated Balance Sheet
1
Intangible Assets
2 Fixed Assets
3 Financial Assets
4 Leased Equipment
Intangible assets, amounting to
DM 611 million (1991: DM 774 mil
lion) comprise goodwill arising from
the capital consolidation and from
individual company financial state
ments, acquired EDP software, pat
ents and, to a lesser extent, advance
payments made. The decrease
against the previous year is largely
due to amortizations of goodwill
charged to income and to the write
off of Eurocopter's goodwill to
retained earnings.
The increase in property, plant
and equipment by DM 2,680 million
to DM 19,254 million is derived
from additions of DM 7,829 million,
of which DM 1,410 million represent
net book values that are to be in
cluded within the scope of the first-
time full consolidation of the Deut
sche Aerospace Airbus group. These
additions are reduced by
re-classifications of DM 17 million,
disposals of DM 433 million, and
depreciation allowances of DM 4,699
million. Special tax-deductible
depreciation allowances amount to
DM 163 million (1991: DM 77
million); depreciation allowances in
excess of scheduled depreciation
amount to DM 21 million (1991:
DM 39 million).
A complete listing of our stock
ownership will be filed with the
commercial registry office at the
county court house in Stuttgart un
der the number HRB 15,350.
Unscheduled write-downs,
largely of investments in associated
companies and of other long-term
receivables totaling DM 83 million
(1991: DM 115 million) had to be
made.
Investments in non-current as
sets should have been written up by
DM 7 million in accordance with the
value appreciation doctrine (rein
statement of original values, Section
280 of the Commercial Code). How
ever, such a write-up was omitted
for tax reasons.
The increase in leased equip
ment - almost exclusively vehicles -
by DM 1,685 million to DM 9,777
million, pertains largely to
Mercedes-Benz Credit Corporation,
Norwalk, U.S.A., and to Mercedes-
Benz Leasing GmbH, Stuttgart.
About 85 % of the balance sheet total
pertains to these two companies.
Special tax-deductible depreciation
allowances amount to DM 3 million
(1991: DM 10 million).
5
Inventories
Mercedes-Benz and Deutsche
Aerospace account for the majority
of consolidated inventories. The in
crease over last year is, with rough
ly DM 1,150 million, derived from
the Mercedes-Benz corporate divi
sion, particularly from Mercedes-
Benz AG and its foreign sales com
panies and with about DM 1,250
million from the DASA corporate
division and DM 1,650 million as a
result of the first-time, full consolida
tion of the Deutsche Aerospace
Airbus group.
6 Advance Payments Received
Advance payments received
amounting to DM 5,549 million
(1991: DM 5,827 million) were al
most exclusively for projects and
long-term contracts at AEG, DASA
AG, Dornier, Eurocopter and MTU;
they were deducted from inven
tories.
7 Receivables from Sales
Financing
This caption pertains to accounts
receivable from customers totaling
DM 6,166 million (1991: DM 4,255
million), of which DM 2,804 million
(1991: DM 2,699 million) mature
after more than one year.
8 Receivables
9 Other Assets
Approx. DM 0.4 billion (1991:
DM 0.3 billion) of the receivables
from related companies pertain
mainly to fixed-interest debt instru
ments and securities.
Other assets include invest
ments of liquid funds in debt instru
ments not traded on stock ex
changes. They amount to DM 437
million (1991: DM 2,564 million).
10 Securities
11 Cash
During the year under review,
we purchased 225,511 common
shares (par value DM 11.3 million =
0.48 % of the total outstanding share
capital) at an average price of DM
709 a share.
In November of 1992, we sold
145,990 shares to our employees
(par value DM 7.3 million = 0.31 %
of the total outstanding share capi
tal) at a preferential price of DM 469
for each share (in the event that one
share was purchased) or DM 520 for
each share (in the event that two
shares were purchased).
Cash amounting to DM 2,968
million (1991: DM 2,010 million)
consists of deposits in financial insti
tutions, cash on hand, deposits at
the Bundesbank (German Federal
Bank), in post office accounts, and
checks on hand.
We owned 122,287 common
shares on the balance sheet date
(par value DM 6.1 million = 0.26 %
of the total outstanding share capi
tal).
Other securities pertain mainly
to fixed interest securities.
Within "current assets" there
would have been a revaluation of
DM 26 million necessary under the
revaluation obligation. This did not
take place due to tax law.
Liquid funds, shown among
various balance sheet captions, total
DM 9.8 billion (1991: DM 10.6
billion).
12 Prepaid Expenses and
Deferred taxes on income-
Deferred Taxes
affecting elimination entries amount
to DM 1,329 million (1991: DM
1,596 million). Deferred taxes -
a debit balance overall - as shown
in the consolidated individual
balance sheets are not included.
13 Stockholders' Equity
14 Capital Stock and Paid-in
Capital stock and paid-in capital
Capital
pertain to Daimler-Benz AG.
15 Retained-Earnings
Retained earnings comprise re
tained earnings allocated under stat
ute of DM 160 million, retained
earnings allocated for treasury stock
of DM 33 million, and other retained
earnings of Daimler-Benz AG of DM
8,534 million. Also reflected here
are the company's share in the re
tained earnings and results of opera
tions of consolidated subsidiaries,
insofar as they have been earned by
them since their affiliation with the
group. Additionally, this caption
takes into account the cumulative
results from the elimination of inter
company earnings and from debt
consolidation, as well as the differ
ence arising from currency transla
tions.
16 Minority Interests
The stock ownership of outside
third parties in the subsidiaries in
cluded in consolidation pertain
mostly to Daimler-Benz Luft- und
Raumfahrt Holding AG, AEG,
Mercedes-Benz of South Africa,
Dornier, MTU and Eurocopter.
17 Provisions for Old-Age Pen
sions and Similar Obligations
Pension provisions rose to DM
12,217 million (1991: DM 10,790
million). DM 499 million of the
DM 1,427 increase pertains to the
change in the circle of consolidated
companies.
When the assets of the provident
funds are added to the provisions
for old-age pensions, the company's
pension obligations are fully
covered.
The provisions for taxes include
DM 764 million (1991: 645 million)
which pertain, to a large extent, to
Daimler-Benz AG for open years
awaiting final assessment.
The difference amount with re
serve characteristics resulting from
the capital consolidation originates
from the first-time consolidation of
one subsidiary; this amount will be
available to offset potential extraor
dinary expenses during the start-up
years.
Apart from existing warranty
obligations, other provisions take
into account, above all, obligations in
the personnel and social area, risks
for losses inherent in pending busi
ness transactions, and risks arising
from contractual liabilities and pend
ing litigation.
Additional provisions exist for
expenditures which are based on ap
proved change-over, alteration and
some development projects, for pos
sible additional costs in connection
with completed contracts, and for
maintenance which had been
planned for the year under review
but had to be deferred until the fol
lowing year. In addition, provisions
have been recorded for future obliga
tions in connection with restructur
ing activities.
The DM 5,239 million increase
pertains with DM 4,028 to the
Deutsche Aerospace Airbus Group
which was consolidated via DASA.
19 Liabilities From Leasing
and Sales Financing
The liabilities from leasing and
sales financing serve the refinancing
of leased vehicles and equipment
and of receivables derived from
sales financing. The caption deben
tures comprises commercial paper
denominated in U.S. dollars; they are
shown at the issue price plus ac
crued interest.
Miscellaneous liabilities com
prise loans payable, and interest ac
cruals in connection with sales
financing.
The liabilities due to leasing and
Sales financing are secured by
pledging redeemable bonds in the
order of DM 45 million (1991: DM
11 million).
20 Accounts Payable Trade
21 Other Liabilities
Of the liabilities to related com
panies, about DM 130 million (1991:
DM 370 million) pertain to liabilities
to financial institutions. Excluding
those, they pertain mainly to obliga
tions by Deutsche Aerospace Airbus
GmbH to Airbus Industrie G.I.E.,
Toulouse, as well as to liabilities at
DASA relating to project companies.
Debentures pertain to commer
cial paper issued in D-marks; they
are shown at the issue price plus ac
crued interest.
Miscellaneous liabilities largely
comprise December 1992 accruals
for wages and salaries as well as tax
liabilities.
Liabilities to financial institu
tions, notes payable, liabilities to af
filiated and related companies and
miscellaneous liabilities are largely
secured by mortgage conveyance,
liens and assignment of receivables
in the order of DM 1,091 million
(1991: DM 1,231 million).
Contingent Liabilities
Other Financial Obligations
In addition, we are liable for
non-estimable compensatory pay
ments, guaranteed by Deutsche
Aerospace AG for 1993 and future
years. For outside shareholders of
AEG Aktiengesellschaft and of
Daimler-Benz Luft- und Raumfahrt
Holding AG, there exist claims for
non-estimable compensatory pay
ments.
Moreover, there exist contrac
tual performance guarantees that
could not reasonably be estimated.
Other financial obligations aris
ing from rental, property lease and
leasing contracts average approx.
DM 748 million annually; the aver
age contract duration is 8 years.
For companies not included in
consolidation, we have other finan
cial obligations amounting to
DM 102 million; the average con
tract duration is 9 years.
In connection with the fiduciary
settlement by Deutsche Aerospace
Airbus GmbH of the federally guar
anteed serial credits, the effective
amount cannot be determined until
the beginning of 1995 when the fed
eral government's last tranche of
DM 1 billion is due; this also applies
to the reorganization profit received
in 1989.
Within the scope of the
government-supported Airbus-
Development-Program, Deutsche
Aerospace Airbus GmbH has agreed
to assume performance portions
itself. DM 331 million thereof relate
to the time after the balance sheet
date, to the extent that they are not
already reflected in the annual ac
counts.
All assets acquired by Deutsche
Aerospace Airbus GmbH with sub
sidy funds have been conveyed to
the Federal Republic of Germany as
security.
With reference to the develop
ment work for the Airbus program,
Airbus Industrie G.I.E. has given a
performance guarantee to Agence
Executive (government office in
charge of Airbus); this guarantee was
taken over by Deutsche Aerospace
Airbus GmbH - to the extent of its
share interest - without restriction.
Deutsche Aerospace Airbus GmbH
considers the obligation arising
therefrom fully covered by the rele
vant agreements for the financing
and execution of the development
work.
Beginning in 2002, the profit
sharing agreement provides that the
federal government will share in the
profits of Deutsche Aerospace
Airbus GmbH to the tune of 40 %.
This rule, in its economic effect,
stipulates the sequence of the
government's repayment demands.
The remaining financial obliga
tions, particularly purchase order
commitments for capital invest
ments, are within the scope of nor
mal business activities.
The obligation arising from stock
subscriptions and from capital sub
scriptions in close corporations pur
suant to Section 24 of the GmbH
Act, amount to DM 14 million.
We are jointly and severally lia
ble for certain non-incorporated com
panies, partnerships and joint ven
ture work groups. In addition, there
exist performance contracts and
miscellaneous guarantees in connec
tion with ongoing business transac
tions.
Notes to the Consolidated Statement of Income
22 Sales
23
Increase in Inventories and
Other Capitalized In-House
Output
24 Other Operating Income
The income amount included in
this caption for the reversal of provi
sions totals DM 1,519 million.
(1991: DM 893 million). Additional
income is derived from exchange
profits in connection with ongoing
purchase and payment transactions,
mostly earned abroad; exchange
losses against such income are
shown under other operating
expenses. In addition, income is
derived from costs charged to third
parties, from security sales, and
from rentals and leases.
Altogether, DM 2,226 million of
other operating income is attributa
ble to prior years.
25 Cost of Materials
26 Personnel Expenses/
Employment
in relation to a total output of
DM 100,879 million (1991: DM
98,566 million), the ratio of cost of
materials amounted to 49 % (1991:
50 %).
The 1992 employment figures
for the first time include the em
ployees of Deutsche Aerospace
Airbus GmbH and its subsidiary.
In addition, 12,072 people are
employed in the joint venture com
pany Eurocopter.
27 Amortization of Intangible
Assets, Depreciation of Fixed
Assets and of Leased Equip
ment
The depreciation of fixed assets
pertains with more than 50 % to
Mercedes-Benz AG. The increase in
depreciation of leasing equipment
results from the growth of the
leasing business of our domestic and
foreign finance companies.
28 Other Operating Expenses
This caption comprises additions
to provisions, maintenance ex
penses, administrative and selling
expenses including sales commi-
sions, rental and lease expenses, for
eign exchange losses incurred in the
normal course of business, freight-
out, packaging, and the expenses in
connection with the currency re
valuation at our Brazilian subsidiary
companies.
Overall, DM 161 million is appli
cable to prior years.
29
Income from Affiliated, Asso
ciated and Related Companies
30 Net Interest Income
The net interest expense balance
from leasing and sales financing be
fore the elimination of group inter
nal interest income and expenses
at the leasing and financing com
panies amounts to DM -421 million
(1991: DM -446 million).
31 Write-Downs of Financial
Assets and of Securities
32 Extraordinary Results
33 Taxes
The decline in tax expenses is
largely due to a decline in income in
the domestic circle of companies in
cluded in the interlocking relation
ship with respect to taxes.
34 Net Income
Consolidated net income of DM
1,451 million has predominantely
been earned by the Mercedes-Benz
corporate unit. Special tax depre
ciation of fixed assets and tax-
allowable write-downs of current
assets have reduced net income only
slightly. Also, future charges in
connection with such write-offs will
not be material.
Other Information/Boards
Under the presumption that the
proposed dividend is ratified by the
shareholders at the Annual Meeting
on May 26, 1993, the remuneration
paid by the group companies to the
members of the Board of Manage
ment and the Supervisory Board of
Daimler-Benz AG amounts to DM
17,002,148 and DM 2,157,079, re
spectively. Disbursements to former
members of the Board of Manage
ment of Daimler-Benz AG and their
survivors amount to DM 10,247,694.
An amount of DM 75,954,745 has
been provided for on the books of
Daimler-Benz AG and of Mercedes-
Benz AG for pension obligations to
former members of the Board of
Management and their survivors. As
of December 31, 1992, advances and
loans to members of the Board of
Management of Daimler-Benz AG
amounted to DM 220,741. Home
loans included herein are not subject
to interest; other loans and advances
bear interest averaging 5.5 %. Dur
ing the year, DM 71,468 was repaid.
The stipulated maturities amounted
to ten years for home loans; they did
not exceed one year for other loans
and advances.
Independent Auditors' Report
The accounting records and the consolidated accounts, which have been
audited in accordance with professional standards, comply with the legal
provisions. With due regard to the generally accepted accounting principles,
the consolidated accounts give a true and fair view of the assets, liabilities,
financial position and results of operations of the Daimler-Benz group. The
business review report, which summarizes the state of affairs of Daimler-
Benz Aktiengesellschaft and that of the group, is consistent with the finan
cial statements of Daimler-Benz Aktiengesellschaft and the consolidated fi
nancial statements.
Frankfurt am Main, March 24, 1993
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Zielke
Wirtschaftsprüfer
(Certified Public Accountant)
Dr. Koschinsky
Wirtschaftsprüfer
(Certified Public Accountant)
The annual financial statements of Daimler-Benz AG as of December 31,
1992, show an unappropriated profit of DM 5,094,165,653. It will be proposed
to the Annual General Meeting that this amount be applied as follows:
Stuttgart-Mohringen, March, 9, 1993
The Board of Management
Report of the Supervisory Board
The result of the examinations
made by the Supervisory Board and
the auditors showed no cause for
questioning. We approved the finan
cial statements of Daimler-Benz AG
as prepared by the Board of Manage
ment; they are hereby ratified.
We concur with the proposal of the
Board of Management regarding the
application of the unappropriated
profit. The financial statements, the
business review and the external
auditors' report were available to
the Supervisory Board.
Stuttgart-Mohringen
April 1993
The Supervisory Board
Chairman
In the four Supervisory Board meet
ings held last year and by means of
written and verbal reports, we were
informed in detail about the state
of the corporation and principal
matters of corporate policy, and dis
cussed these issues with the Board
of Management. In particular, dis
cussions centered on questions in
connection with the development of
the company into an integrated tech
nology group. We also concerned
ourselves with the trend in employ
ment and earnings and with corpo
rate planning, including investment
policy. In addition, we discussed im
portant individual business transac
tions and made business decisions
which, by law or company bylaws,
had to be submitted to us for
approval.
We examined the financial state
ments and the business review com
piled for both Daimler-Benz AG and
the group, as well as the proposal for
the application of unappropriated
profit. The financial statements of
Daimler-Benz AG and of the group
as at December 31, 1992, including
the business review and the
accounting principles used, were
verified by KPMG Deutsche Treu-
hand-Gesellschaft AG, Wirtschafts-
prüfungsgesellschaft, Frankfurt
am Main, and found to be in
accordance with the books and with
the pertinent legal requirements.
The Supervisory Board, in a joint
meeting with the Board of Manage
ment on April 2, 1993, approved the
result of the audit.
From the Daimler-Benz Collection
Günter Scharein
* 1 9 49
Sehnsuchtstriptychon, 1987/88
Oil on hard foam panel
124 x 330 cm
The paintings of Günter Scharein,
with their living, vibrant, "breath
ing" colors which appear to bathe in
an unreal light, hinting at unfathom
able depths, evoke a mystic, medita
tive mood strongly reminiscent of
modern altar pictures. Light and
dark graduations of the same color,
honed with meticulous care, are the
objective foundation for a highly
emotional color "experience" which
transcends empirical dimensions.
Annual General Meeting
May 26, 1993
10.00 o'clock
Hanns-Martin-Schleyer-Halle
Mercedesstraße 69
7000 Stuttgart 50 (Bad Cannstatt)
Daimler-Benz AG
BPA
Postfach 80 02 30
D-7000 Stuttgart 80
(as of July, 1, 1993: 70546 Stuttgart)
Phone number 0711-1 79 22 87
Telefax number 0711-1 79 41 16
This report has
been printed on
environment-friendly
paper bleached without
the use of chlorine.